Finances rank among the top concerns for couples going through divorce. You worry about dividing assets, maintaining your lifestyle and securing your post-divorce financial stability.
While many focus on splitting retirement accounts and property, credit scores often get overlooked or forgotten. However, your credit score affects future loans and overall financial standing, so it’s important to protect it during this tough time.
How divorce can threaten credit scores
Divorce creates multiple credit risks you might not expect. Joint accounts become potential problems if your ex-spouse stops making payments. Missed bill payments can also happen during the chaos of separation.
Additionally, court-ordered debt division sometimes conflicts with original credit agreements. Your debt-to-income ratio also changes when household income drops. These factors combine to threaten your financial standing just when you need stability most.
Keep track of joint accounts
The moment you decide to divorce, stay on top of all joint accounts and debts. Although half of the account is yours, closing joint accounts isn’t advisable during divorce. Still, you can monitor the account transactions.
Try to monitor credit reports weekly for large, unexpected changes or charges. Taking these proactive steps can help prevent your spouse’s financial decisions from damaging your credit score.
Create a debt payment plan
A payment plan helps you avoid missed deadlines and keeps your credit score healthy during the separation. Make a list of all your debts, including:
- Mortgage or rent
- Car loans and insurance
- Credit card bills
- Medical bills
- Student loans
Create a payment schedule based on your new financial situation. Missing even one payment can drop your score significantly, making your financial fresh start much harder.
Document everything
Keep detailed records of all financial communications and transactions during your divorce. Save emails about account changes and screenshots of your balances on the date of separation. Request written confirmation when closing joint accounts as well.
More importantly, document any payment agreements with your spouse and have these notarized, if possible. These records protect you if disputes arise about who paid what or when accounts closed.
Setting the foundation for your financial future
Protecting your credit during divorce safeguards your financial independence after the process ends. Consider working with both a divorce attorney and a financial advisor to create a comprehensive plan. With careful planning, you can finish your divorce with good credit and a more financially stable footing.