Saving Your Credit Rating Through The Divorce Process

Although you may receive a settlement in a divorce decree that stipulates that your former spouse is responsible for relieving some of your debts (it is rare that a full award will be made), this does not mean that the debt itself is not your burden and responsibility, up to and until the date of its fulfillment. On the flip side, if the court demands that you now have certain financial obligations, your spending and living habits (and budget) may have to be shifted accordingly. The first takeaway to make note of here is that debts like a car loan, especially applied for jointly with your ex, will not disappear, and neglecting them can have a serious impact on your credit score during a divorce.

There are a few financial changes you should make either prior to or during the divorce, depending on how connected your finances are with your spouse. One of the first things I ask my clients is how many of their bank accounts, if any, are jointly owned with their spouse. If there are, the usual process includes separating the accounts or closing them entirely. If it is a credit account, call the creditors to discuss how one can transfer the account to solely either spouse. 

Beyond that, it is important to maintain the behavior that built the good credit score in the first place; you should continue to pay bills on time. This also applies to joint bills, as even though you may not be speaking to your spouse during the divorce, it is still a bill that must be paid and if it is the case where one alone cannot pay it, then you must be in communication at least to make a payment. 

The bill-paying pattern is a critical component of your credit score, so it is best not to let semantics and arguments to impede the on-time payment of joint bills. Unless creditors or the judge explicitly say so, it would be unwise to believe that joint accounts are no longer your responsibility if you have separated. Talk with your spouse, if you can, and organize a payment plan that is fair to both parties, until it can be finalized whether the debt is only in one name.