How Divorce Can Impact Your Credit ScoreBy Moskowitz Law Group, LLC |
Getting divorced is not an easy endeavor, and the list of challenges this process may present extends far beyond the end of a relationship. Economically speaking, divorce can impact home ownership, child custody, and stretch already tenuous financial obligations.
Unfortunately, a divorce can have a detrimental impact on one’s credit score, which may be easily overlooked during such a chaotic time. Without proper credit, you may be ineligible to purchase a new home or take out loans to help cover unforeseen expenses. However, there are several steps you can take to avoid having your credit score negatively impacted during a divorce.
Closing Joint Accounts
It is critical to separate yourself from all joint accounts when filing for a divorce. If financial accounts are shared, both parties bear a legal responsibility to satisfy those accounts, regardless of who may have shown irresponsibility in allowing payments to lapse and accruing late fees. Thus, it’s pivotal at the time of filing to either remove your name from the account or stay civil with your partner so they honor their obligations and do not jeopardize your line of credit. Importantly, however, neither spouse may unilaterally remove the other spouse from joint accounts or credit cards or otherwise “cut them off.” There must be a mutual agreement or court order before doing so. Otherwise, the spouse who unilaterally made the change could be ordered to reinstate the other spouse’s access. A skilled divorce attorney can navigate this issue for you.
It is also important to note that if your name is taken off an account, your credit score will drop at first, but that is not cause for alarm. With time and consistent payments on obligations in your name, your score will rise to a healthy level.
Additional Steps to Protect Your Credit
In addition to closing joint accounts, there are other important measures you can take to protect yourself financially before, during, and after your divorce. Steps that you can take to protect your credit include:
- Changing all security information to ensure that your spouse cannot access your financial information. This includes PINs (personal identification numbers), login names and passwords, and answers to security questions.
- Opening your own checking and savings accounts. You may also want to safeguard all new assets and place them in a space where your spouse does not have access.
- Freezing your credit reports can offer extra protection. This prohibits your spouse from opening a new account with your name attached to it.
Again, however, you should not take unilateral action to “cut off” your spouse. There must be a mutual agreement or court order for a new financial arrangement that differs from the existing financial status quo. A skilled divorce attorney can navigate this issue for you.
Getting divorced does not have to put your financial future in jeopardy. While credit damage during the marriage may be inevitable, you can successfully rebuild and take steps to prevent future harm.
At Moskowitz Law Group, we are here to reduce the frustration and pain associated with divorce. To learn more about how divorce can impact your credit score and how we can help you through this process, give us a call today. Your initial consultation is free.