Protect Your Credit after a Divorce
Too many people emerge from a divorce not only exhausted by the emotional toll a divorce takes but also with a seriously diminished credit score. Read on to learn more about some of the most common reasons that those going through a divorce experience a dip in their credit score, and learn what you might be able to do to prevent it.
Reason 1: Their former spouse stops paying bills on accounts that still bear their name
If a car payment or mortgage that continues to have your name on it was assigned to be paid by your ex in the divorce, be sure to keep an eye on the account. Many parties to a divorce have been dismayed to learn, when applying for a new line of credit, that their credit score has suffered because their ex stopped making payments on joint accounts. Either request that the financial institution provide you with statements, or check the account’s status online regularly to be sure it’s current; if there is an unpaid balance, speak with your attorney about obtaining a court order that will compel your spouse to pay. You should also seek to have your name removed from any accounts that are no longer your responsibility, so that you don’t need to worry whether or not they get paid on time.
Reason 2: They take on more debt than they can afford, either in the division of property or during the divorce
When dividing up marital property, you may feel tempted to try to hold on to a number of large assets with payments due each month, or take on a number of debts to ensure that they get paid each month. Be sure you create a budget that will accurately reflect your expenses in a new single-income household, to ensure that you do not commit to taking on more debt than you can pay. On a similar note, while your expenses may be high, try to avoid accruing excess credit card debt while you’re going through a divorce. Take a hard look at the expenses you may be able to cut, and consider asking a family member for a loan rather than accrue high-interest debt as you try to embark on a new life.
Reason 3: Their former spouse uses accounts in their name for their own purposes, or opens new accounts in their name
Divorces can become very contentious, and one way that acrimony can manifest is in exes taking revenge on their former spouse’s finances. In some cases, this can look like a spouse secretly draining a jointly-held account, or using a jointly-opened line of credit for their own purposes; in other cases, it can look like a spouse opening new lines of credit for their use, using their ex’s name and personal information. You may want to consider subscribing to a credit report monitoring service after a divorce, and keeping a close eye on any accounts to which your spouse has access.