How To Maintain Good Credit during a Divorce

During a divorce most couples focus on dividing up their assets; such as who gets the car, dog, or house. The concern over division of assets coupled with the emotional stress, can lead to neglect of another type of asset – credit.

In some cases, your credit can take a lot of damage during a divorce. Most couples share finances through joint accounts, bills, and loans, and it can be a credit nightmare if these aren’t divided up correctly when the couple splits up. Even if debts are discussed, the divorce settlement can be very different than what was agreed upon with lenders, and court orders don’t let you off the hook with creditors.

Here’s an example of why splitting up bills and accounts must be done carefully:

One of our clients agreed that his ex-wife could keep their home if she refinanced the existing mortgage into her own name. The divorce settlement included the refinance requirement but there was never follow up on whether it was completed. A few years later, he went shopping for a home with his new wife, and got turned down for a mortgage. It turns out his name was still on the loan, and even worse, his wife had many recent late payments on the mortgage which showed up on his credit. The husband’s credit took a serious hit and needed repair, and it completely ruined the couple’s plans for their dream home.

Furthermore, most divorces end with couples having a lot of resentment towards each other. A malicious divorcee could do a lot of financial damage to their ex if they wanted to. During the divorce somebody could rack up thousands in debt through spending with joint accounts. Even worse, an ex could commit fraud and identity theft since they probably know all of your personal info.

So even though there can be a lot on your mind during a divorce, it’s paramount to pay attention to your credit.

Divorce can be devastating for credit scores while the settlement is in process. Some lawyers will advise their clients to stop paying their joint bills but the majority of consumers do not realize that scores can be impacted after as well.

Here are some steps that will save your credit during a split-up:

  • Make sure credit is priority for all. It’s important to let your spouse, lawyer, and the courts know that you want to maintain your credit throughout the process. Let your spouse know that cooperating with credit agreements is in their best interest too and they will want to comply.
  • Check your credit early. It’s important to get a copy of your credit report as soon as talks of divorce happen to look for changes as well as continuously monitoring it. You can order your free report from the three credit bureaus (Experian, Equifax, and TransUnion) annually at
  • Pay your bills on time. Divorce can take up a lot of your attention, so it’s important to still remember to pay bills since once delinquent scores can drop hundreds of points.
  • It’s very important to close joint accounts. You should note that it may cause score drops depending on your whole credit profile since it can lower your credit utilization ratio (the amount of credit you have available compared to what you may owe) as well as change your variety of credit factor. However, using strategy can help to take the score drops at the right timing when financing isn’t on the horizon. The key is avoiding financial ruin an ex could cause by racking up a huge debt before the divorce is final.
  • You should switch all accounts to one name. Many accounts will be in the names of both people, such as the phone and water bills, and something trivial like a Netflix account. You should put them in one name on a case-by-case basis, for example switching a cell phone account to the person that uses it.
  • Decide how to deal with joint car loans. If you owe on a vehicle and the loan is in both names, one spouse can buy the vehicle from the other or you can refinance the loan into one name. Another option is to just sell the car.
  • The house should be sold or refinanced. If the mortgage is in both names you need to either put it on the market or refinance this loan into one name. The refinance must happen quickly and all parties should have proof that the refinance will be approved . This could prevent you from having late mortgage payments/a foreclosure on your report.
  • Use a fraud alert to protect yourself. An angry spouse could commit fraud since they have access to so much of your personal info, even if you don’t expect them to do it. Putting a fraud alert on your credit will prevent anyone from opening new credit in your name without the creditor confirming with you direct that it is a legitimate application.
  • Since each case is unique and complicated, it’s also a good idea to visit a reputable credit expert for advice and to see how your score might be affected.

 Jan and Jim had recently divorced. Jim has insurance that continues to cover their children’s medical bills. One of their kids visits a doctor and the doctor promises verbally to take whatever payment their insurance company provides. A few months later, Jan receives a bill in the mail for an amount that the insurance company did not cover, and she forwards it to Jim. Jim calls the doctor and complains that the charges should be waved due to the original promise. The doctor’s office agrees to look into it and get back to him. A new invoice is mailed out to Jan for the debt owed with a letter stating that after review they have found that the amount due is correct. Jan discards the invoice, thinking Jim already took care of it. Since they don’t live together Jan forgets about it and doesn’t even mention it to him. Eventually it becomes a collection on his credit. The $100 bill now costs him hundreds of points on his score and a rejection for a refinance of the loan associated with the home. Jim lost out on savings in the hundreds of thousands over the life of the loan, and now has to go through the process of restoring his credit because of this missed payment.

When two people split up and change addresses the bill payer must always make sure ALL creditors, doctors, and even something as minor as EZ-Pass are updated with the new address.


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