Protect Your Credit Score Through Job Changes, Divorce, and More

Major life changes—like a new job, a move, or a divorce—are stressful enough without having to worry about your finances. The uncertainty that comes with these transitions can make it feel difficult to stay on top of your financial obligations. While these events can create challenges, it is possible to navigate them proactively to protect your credit score. It’s important to remember that you don't have to figure it all out on your own, as Member One is here to help you through these shifts.

This guide is designed to offer reassurance and practical Member One financial tips to help you manage your credit when life is unpredictable. We will explain the connection between life changes and credit, provide strategies for specific situations, and highlight the tools and support available to you as a member.

How Life Changes and Credit Scores are Connected

One of the most common misconceptions is that life events themselves directly harm your credit. Your credit report does not show that you’ve lost a job or gone through a divorce. Instead, it shows the financial consequences of those events. Understanding how life changes and credit are indirectly linked is the first step toward protecting your score.

Think of it as a chain reaction. For example, a job loss can lead to a sudden drop in income, which can make it difficult to pay bills on time and may result in missed payments. It is these missed payments and any high credit card balances used to cover expenses that are reported to the credit bureaus and ultimately lower your score.

Furthermore, the strain of these events can lead to other actions that impact your score, such as applying for a new loan after a divorce (creating a hard inquiry) or carrying high balances on credit cards to cover moving expenses (increasing your credit utilization).

Strategies for Navigating Specific Life Transitions

While every situation is unique, here are some actionable steps you can take to manage your credit during common life events.

Managing Your Credit During a Job Change or Loss of Income

A shift in income requires an immediate financial adjustment. The first step is to reassess your budget and pause any non-essential spending to conserve cash.

Most importantly, contact your lenders before you anticipate missing a payment. When you call, be prepared to explain your situation clearly and ask about specific programs like "forbearance," which temporarily pauses payments, or a "deferment."

Even a temporary reduction in your minimum payment can provide critical breathing room and prevent a negative mark on your credit report. While it may be tempting, try to avoid relying on credit cards to cover major living expenses, as this can quickly increase your debt load.

Protecting Your Credit During a Divorce

Navigating finances during a divorce requires clear communication and a plan. Start by creating a detailed inventory of all joint debts, including credit cards and loans. Work together on a strategy to close these accounts or refinance them into one individual’s name.

This is a critical step, as a divorce decree assigning a debt to one person does not remove the other's legal obligation in the eyes of the lender if their name is still on the account. Be sure to also review who is an authorized user on your personal credit cards and remove your former spouse if necessary.

Staying on Track During a Relocation

Moving is expensive and can easily disrupt your financial routines. To avoid missed payments, set up mail forwarding and update your mailing address with all creditors as soon as possible. Creating a detailed moving budget can also help you anticipate expenses and avoid placing large, unplanned balances on high-interest credit cards.

Additionally, be vigilant about security during this time. A move is a prime time for mail to be lost or intercepted, increasing the risk of identity theft. Monitor your accounts closely for any unrecognized charges during and immediately after your move.

Core Habits to Maintain a Healthy Credit Score

During times of financial instability, falling back on foundational credit habits is more important than ever.

• Focus on On-Time Payments. Your payment history is the single most significant factor in your credit score. If you are worried about missing a due date, set up automatic payments for at least the minimum amount due on each account.

• Keep Credit Utilization Low. Lenders look at your credit utilization ratio, which is the amount of credit you're using compared to your total credit limit. Aim to keep your balances below 30% of your limit. Lenders view consistently high utilization as a sign of financial distress, so managing this ratio becomes even more important when your income or expenses have changed.

• Communicate Proactively. It is always better to contact your lenders to explain your situation than to simply miss payments. A phone call can open the door to solutions you may not have known were available.

Know Where You Stand: How to Monitor Your Credit

To manage your credit score effectively, you need to know what it is and what is on your credit report. You are entitled to a free credit report from each of the three major bureaus (Equifax, Experian, and TransUnion) every year through the official website, AnnualCreditReport.com.

It's helpful to remember the difference: your credit report is a detailed history of your accounts and payments, while your credit score is the three-digit number that summarizes that history at a glance.

For more convenient and regular updates, Member One members can easily check their credit score for free right inside our Online Banking and Mobile App.

Support for Your Financial Journey

Navigating a major life change is challenging, but you don't have to do it alone. Proactive management and communication are key, and Member One is here to help. We offer financial counseling and resources to help our members create a plan during difficult times. Our online financial calculators can also help you explore options for managing debt or consolidating loans.

If you are experiencing a life transition and are concerned about your finances, we encourage you to contact us. A conversation with one of our team members can help you understand your options and move forward with a plan that protects your financial health.