Maintaining Your Credit Through a Divorce

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While going through a divorce, the last thing on your mind is how it will affect your credit. Your attorney takes the responsibility for making sure that you are legally separated from your spouse. That involves a separation of debt and assets. Typically a judge will issue the final decree and the final divorce document lists the items that you are responsible for, and those that are delegated to your spouse.

While future lenders will use the final divorce decree to eliminate those debts assigned to your ex-spouse from your debt to income ratio, the divorce decree does not protect your credit.

At the time that you applied for joint loans (while you were married) creditors relied on both of you to approve the credit card, car loan, or home mortgage that you received. The divorce decree cannot set aside the creditors right to come after you to recover un-paid debt obtained before you were divorced. Should your ex-spouse fail to make payments on time, or default totally on the loan, this information will be reported on your credit and could affect your credit score for years to come.

So what should I do? Always seek to pay off and close any joint account. Tell your attorney that failure on the part of your ex-spouse to pay their obligations after the divorce could affect your credit. Make your spouse sell, or refinance any items that cannot be paid off; while this may force them to adjust their lifestyle to their current income, it will prevent you from being reported for poor payment history.

I have heard that closing accounts could lower my credit score, is that true? Yes, closing accounts could lower your score, but not nearly as much as finding out a year later that your ex-spouse didn’t make any payments and you owe thousands of dollars in outstanding balances.

If the divorce was particularly bitter, continue to check your credit regularly over the next several years. Your ex-spouse knows more about you than most people. It would not be difficult for them to fraudulently open new accounts in your name. Most credit agencies will allow you to put an alert on your account that requires a phone call to you before new credit is issued.

For more information on credit issues go to:

www.experian.com
www.transunion.com
www.equifax.com


This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.