You may have heard that a divorce can damage your credit score. The divorce itself doesn’t influence your credit score, but actions that you and/or your ex-spouse take can have a negative impact.
Here are three quick tips to keeping your credit score healthy after a divorce:
1. Remove former spouse as an authorized user
If you have a credit card that is in your name alone, but at some point you added your spouse as an authorized user, you need to remove them from that status and cancel their card. This will prevent your former spouse from incurring any more debt on the card, which pursuant to your contractual obligations with the credit card company, only you would be liable for paying.
2. Close joint accounts
If you created any joint debts during your marriage (both of your names are on the account), you and your ex should close as many of those accounts as possible so that no more debt can be incurred on the accounts. This is important because for jointly held accounts, each party is responsible for paying the entire amount of the debt owed to the creditor, not just the amount of debt incurred by that party. Remember that a divorce decree doesn’t change or alter your contractual obligations with third parties; it only apportions the responsibility for debt payment between spouses.
3. Pay past-due debts that are in your name, even if the judge says your ex has to pay them
Let’s say you have a vehicle loan in your name and your ex was awarded the vehicle in the divorce. Your divorce decree says that your ex is responsible for making the monthly loan payments, but they weren’t required to refinance the loan in their own name because they don’t have sufficient credit. Your divorce is final, a few months go by, and then you find out that your ex stopped making the loan payments. What do you do now? You need to make the loan payments to preserve your credit. Make the payments as soon as possible, and then seek reimbursement from your ex, directly, or through court, where you can also ask for attorney fees and damages.