When your marriage terminates, your financial partnership with your spouse also ends. If you don’t take precautions, your divorce could also impact the credit score that you’ve worked so hard to build. While a divorce or dissolution itself does not affect your credit, failure to make timely payments on your debts — and various other factors — can result in your credit score dropping. It’s important to be aware of the measures you can take to safeguard your credit during and after divorce. Here are some tips to keep in mind for protecting your credit during divorce:
1. Close Joint Credit Cards
One of the first things you should do as soon as you are allowed is close any joint credit cards. Although you can’t close an account during divorce unless both spouses agree or the closure has been approved by the Court. Closing joint credit cards can prevent your spouse from running up debt — which can ultimately impact your credit score — before the divorce or dissolution has been finalized. Doing so can also make your credit score drop because there is less “available credit”. It is best to seek orders from the Court concerning usage of credit cards in joint names,
2. Remove Your Spouse as an Authorized User
If you have a credit card in your name and your spouse is an authorized user on the account, you can contact the credit card company to have your spouse removed. As an account holder, you may be fully liable for this debt — although a judge may order your spouse to pay the portion for which your spouse is responsible. Removing your spouse as a user from your credit card is an easy step to take that can be accomplished simply by contacting the credit card company. Once you take your spouse off the account, you will be the only person who can use the card.
3. Consider Freezing Accounts
If you are unable to close an account, consider putting a freeze on your credit cards to prevent further charges on it. Notably, you and your spouse will still need to make payments on any accounts that have been frozen.
4. Freeze Your credit
Putting a freeze on your credit will keep anyone from opening new accounts or taking out loans in your name without the creditor contacting you directly. To freeze your credit, contact each of the three credit bureaus separately. It’s usually free to do so. Credit freezes can be particularly helpful in situations where a spouse is financially irresponsible and there is a risk that they will incur additional debt by opening new accounts in your name.
5. Check Your Credit Reports Regularly
Protecting your credit during divorce can affect your financial well-being in the future. You may need a good credit score in order to apply for an apartment or mortgage, as well as to open a new credit card. You should regularly review your credit reports to ensure there are no discrepancies — and there have not been any credit lines opened in your name that were unauthorized. You can order a credit report from any of the three major credit bureaus: Experian, TransUnion, and Equifax. You can obtain this free once per year: Annual Credit Report.com – Home Page
6. Review Your Monthly Statements
Review your monthly credit and banking statements for anything that is out of the ordinary. In doing so, you can check to make sure no new debts have been incurred, there is no unusual activity on the accounts, and payments are being made on time.
7. Continue to Make Monthly Payments
When you are going through the divorce or dissolution process, your monthly payments do not stop being due. It’s crucial to continue to make payments on the mortgage, any credit cards, and other marital debts during divorce as directed by court orders. If the debts are in your name, you are ultimately responsible for them, because it is your credit score that will be affected by any failure to pay the monthly minimum payment. In contrast, if the debts are jointly in your name and your spouse’s name, it will affect both your credit scores.
In contrast, if the debts are jointly in your name, and your spouse’s name, you are both liable for the debt. In such cases, even if you agreed that your spouse would be responsible for paying the bill, it’s essential to be aware that your credit can be damaged if they fail to do so. To safeguard your credit, it may be necessary for you to make the payments and seek reimbursement in the domestic relations court through a contempt action.
8. Include Provisions in Your Divorce Decree That Can Protect Your Credit
Your divorce or dissolution decree or Separation Agreement can help to protect you from potential credit damage following your divorce or dissolution. It should specify who is responsible for which debts, including credit card payments — and the mortgage if the marital home will not be sold. This provision can also allow you to take your former spouse back to court for contempt if they refuse to comply.
9. Be Responsible with Your Credit Cards
Whether you’re opening a new account, or you’ve removed your spouse as an authorized user from an existing account, it’s vital to be responsible moving forward with your credit. Even if you can’t pay the balance off each month, make the minimum monthly payment. You should also try to keep the balance low, which can help to protect your credit during divorce — and increase your credit score.
Contact an Experienced Ohio Divorce Attorney
If you are concerned with protecting your credit during divorce or dissolution, it’s imperative to have a skillful divorce attorney by your side who can best advise you. Located in Green, Ohio – halfway between the Akron (Summit County) and Canton (Stark County) courthouses – Melissa Graham-Hurd & Associates, LLC provides knowledgeable counsel to clients for a wide array of divorce matters, including those involving debt division issues. Contact Melissa Graham-Hurd and Associates to schedule a consultation to learn how we can help.