Divorce creates a variety of decisions you must make and actions you must take. In addition to protecting your children and personal well-being, you must make choices about where you will live, how you will divide your assets, and how you to handle divorce proceedings. The decisions you make about your divorce can have a significant affect on your finances and ultimately, can affect your credit rating.
Protecting your personal credit rating is one of the most important things you can do during a divorce. It will affect your future and how quickly you can bounce back after your marriage ends. Lenders will judge you alone based on your income and your score once you are divorced, so a good score can mean the difference between independence and remaining tied to your past. Your score also affects your future spouse, should you choose to remarry. Taking steps to protect your credit score during your divorce should be a priority right from the very beginning.
What can you do to protect your score during your divorce?
Get a Handle on Debt
Request a copy of your credit report shortly after divorce proceedings begin. You can review this information with your attorney and determine which debts are shared and which are yours alone. It is advisable to enroll in a credit monitoring plan so you are alerted to any changes in your credit, whether it is application for new credit or sizable charges on old accounts. Should your soon-to-be-former spouse attempt to apply for joint credit, you will know right away.
Close Your Joint Accounts
As soon as possible, pay off and close joint accounts. Keep a detailed record of when and how the account was closed. You and your attorney can discuss the best way to eliminate joint credit accounts with your spouse. If there is money owed on an account, it is unlikely you will be able to close it. However, you can request a freeze on the account so no further charges can be made against it. This way, you are responsible for the existing debt, but no further debt can be added by you or your spouse. After the divorce case if filed with the Court these steps can only be taken as long as the Court approves the action, or your spouse agrees in writing.
It is essential you remain current on all joint account payments. Do not assume your spouse is making payments. If he or she fails to do so, it will affect your credit score. Even if your arrangement includes your spouse making payments, verify payments are made on time each month.
Also remember to close joint bank accounts. Many checking accounts offer overdraft protection, which means debt can be accumulated against the account. Savings and checking accounts shared between spouses are considered marital property and must be divided evenly. If you close an account and give your spouse half the proceeds, make a note of it so there are no issues later in the divorce.
Establish Credit on Your Own
Once you have taken care of the various joint credit matters, it is time to begin building credit again on your own. Be patient. It takes time to establish yourself once you are divorced, but eventually, you will have solid standing.
Are you concerned about credit or other financial matters during your divorce? You need an experienced attorney to help you. Contact Miller and Steiert, P.C. to discuss your case.
