Money Health

How to Build Credit after Domestic Abuse

Build Credit after Domestic Abuse
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Each year in this country, more than 10 million men and women suffer from domestic violence. And in most cases, the physical abuse they experience goes hand in hand with financial abuse. In fact, financial abuse occurs in 99% of domestic violence cases. So if you are a domestic abuse survivor, it’s important to understand that making a fresh start may require financial as well as physical and mental recovery.

Like many other survivors, you may have concerns about how you’ll provide for yourself and your family financially. If you don’t have strong credit, a good first place to start is to rebuild that credit. With a positive credit history, you are more likely to be seen as a responsible borrower and which could help you be approved for a mortgage, car loan, and other types of financing and credit down the road.

The good news is there are a variety of ways you can build credit and work towards that happy, healthy, and financially secure future you deserve. In honor of Domestic Violence Awareness Month, we’ve compiled this list of useful tips on how to build credit after domestic abuse.

Check your credit

There are a few reasons you may need to build or rebuild your credit. Maybe your former partner cut off your access to credit and cash. Or perhaps you don’t have credit cards or loans in your name alone after spending years as part of a married couple. You may also have bad credit from co-signing on accounts with an ex who did not behave as a responsible borrower.

Before you come up with a game plan to build your credit, the first step is to know where you stand. Visit AnnualCreditReport.com to obtain free copies of your reports from Equifax, Experian, and TransUnion. Take a close look at each report and dispute any errors or inaccuracies you come across. Fortunately, each bureau allows you to do so online. Even if you find that your reports are accurate, they’ll give you some idea of what to expect as you try to build your credit.

Pay your bills on time

Paying your mortgage, rent, utilities, car loan, and other bills on time will help improve your credit score. Since most creditors report debts that are 30 days past due to the credit bureaus, pay your bills as soon as you can. If you’re struggling to pay your bills, you may need to start reducing your expenses and/or increasing your income. It can be hard to know where to start, so consider these ideas:

  • Pick up a side gig: If you’re lucky enough to have a full-time job but could use some extra cash, a side gig may be worth it. Fortunately, options like delivering food and selling handmade items online are flexible, and you can make the gig work with the other demands of your life.
  • Downsize: It may make sense to downsize to a smaller housing, if that is an option. As of 2019, renters spent about 30% of their household budget on housing. If there is any way to limit this expense, you will save money and can move to a larger space once you feel more comfortable with your finances.
  • Cut the extras: While cable, meals out, and a streaming service may help you feel good, they can lead to financial stress if you can’t truly afford them right now. Choose just one or two things that really bring you joy and save the rest for later in your financial recovery.

Look for a job

If you’re new to the working world or have been out of the job pool for a while, it can be a help to your finances and even boost your self-esteem to put yourself out there and seek employment. A steady paycheck can be a huge help when building your credit, so here are some tips to help you enter or re-enter the workforce.

  • Connect to a domestic violence coalition: Your state likely has a domestic violence coalition, which offers resources to help you find work. The National Domestic Violence Hotline is a great place to find organizations at the national and state levels.
  • Update your resume: A well-written, compelling resume is key to landing interviews. Even if you don’t have a lot of work history, recent volunteer work, for example, can help you market your skills and experience. There is free advice on resume building available, or if you have the money, you can get professional help as well.
  • Consider education: Taking a few courses at a community college or even going back to school part-time or full-time to earn a degree may be a good choice if you have limited work history or have been out of the workforce for a long time.

Create a budget (and stick to it)

Building credit is largely based on paying your bills on time and reducing your debt. That’s where a budget comes in. A budget can help you take control of your financial situation. If you’ve never budgeted before because your former partner prevented you from doing so, or just don’t know where to start, here are some budget methods you can try:

  • Line-item: With a line-item budget, you list out your expenses over a year. As you go through the year, compare current expenses to previous ones to ensure you’re on track. If you use this technique, make sure you add a savings-line item into your list of expenses so that you remember to save.
  • Pay yourself first: Pay yourself first is a budget process that lets you allocate a certain percentage of your income towards your savings as soon as you get paid. Rather than focusing on tracking expenses, this budget makes saving money a priority.
  • Envelope: The envelope budget can help you stay on budget for cash expenses like groceries, gas, and other household expenditures. You keep specific amounts of cash in different envelopes, each assigned to a different expense. Once an envelope is empty, you’re done with spending in that category for the month.
  • Zero-sum: The zero-sum budget involves choosing a “job” for each dollar of your monthly after-tax income. It forces you to think critically about what’s important to you, and how you want to spend your hard-earned cash.

Ask for help

You don’t have to go through the process of building credit and gaining financial health on your own. Fortunately, there are a variety of resources that can supplement your income and help you get on your feet:

If you’re experiencing domestic violence, please seek help, it’s available 24/7. Call 1-800-799-SAFE (7233) or connect to the National Domestic Violence Hotline online.

Brush up on your personal finance skills

If you haven’t been able to play an active role in your finances, now is the time to start working on your money skills. Start by checking out free resources on our blog to gain new ideas on how to lower your debt and take control of your finances. The more you learn healthy financial lessons, the easier it will be for you to build your credit and create a healthy financial future.

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Anna Baluch is a freelance writer who enjoys writing about all personal finance topics. She’s particularly interested in mortgages, retirement, insurance, and investing.