Managing Credit Through DivorceProtecting Your Credit During and After Divorce May Be Trickier Than One Thinks!

Guest Article was written by Lyle Solomon, Attorney at Law.

Divorce can bring a lot of financial strain along with causing emotional problems. It can become challenging for you to manage your lending and finances after a divorce. This can make it even more difficult for you if, after your divorce, your credit gets hurt. How can divorce affect your credit? Losing one source of income can put you in a financial bind, leading to missing or late payments on loans, credit cards, or bills. Payment history is essential in determining your credit score and missed, or late payments can lower your score. During divorce proceedings, the judge can order one spouse to make payments for jointly-owned debts. If that happens and your spouse fails to make a payment, it will have an impact on both your and your former spouse's credit reports. Regardless of what is written in your divorce decree, the original loan or credit card arrangement remains in effect.

After a divorce, how can you protect or rebuild your credit?

Going through a divorce may be costly. The amount of income coming into the house reduces considerably, but the expenses remain static. A massive change that comes about in your financial life after a divorce. This may lead to debt problems, and you may desperately want to get out of debt. You may be encountering a steady fall in your standard of living and dealing with debt. This could hurt your credit score. Knowing your credit score and what is currently affecting it is the first step in protecting or restoring your credit after a divorce. The amount of debt and payment history are the two most important criteria influencing credit. Minimizing your liabilities and maintaining a positive payment history are the best things you can do for your credit during and after divorce. 

Continue reading for more information on how to maintain or increase your credit score following a divorce.

1. Adjust your lifestyle and live on a budget

You must adjust to a lower level of living, which may be the most challenging element for you. Because your house's total income has decreased, you will need to live on less money. This may entail significant changes such as moving to a less costly location, lending, refinancing, selling your car, including re-evaluating your spending patterns. You will suffer severely if you do not adhere to this, as you may not accomplish any financial goals in the future.

2. Closing joint accounts entail the following steps

Begin breaking financial links with your husband as soon as you understand divorce is on the horizon. Make a list of all jointly-held accounts using current billing statements and your credit report, then cancel them by phone and in writing, ordering creditors not to re-open them.

3. Check your credit score religiously

Obtain a credit report and thoroughly examine every credit card or loan item on it during the divorce procedures. It's possible that your spouse used a credit card in your name without your knowledge; the debt will have to be settled during the settlement. To prevent this problem entirely, it's recommended to close any joint credit card accounts before finalizing the divorce. This will help safeguard your credit score from the negative consequences of careless expenditure.

4. Obtain a credit card in your name

After a divorce, you'll have to adjust your lifestyle because you'll only have one source of income. If you're short on cash to pay for bills, electricity, and other household needs, a credit card in your name can be a lifesaver. The secret is to apply for a credit card while you're still married, so you may use your spouse's income to meet the credit card company's income standards. Of course, this would be a credit card in your name, but the concept is that your spouse's income can be included in the "household" income.

5. Request a copy of your credit report and make any necessary changes

  • Everyone is entitled to get a free annual credit report under federal law.
  •  If you haven't already done so, go to to get your free credit report. When obtaining your report, double-check that all information is valid and up-to-date. If you find any inaccuracies, you should contact the credit reporting agency as soon as possible to get them corrected. Keep an eye out for symptoms of fraud or identity theft as well. Rather than relying on spouse maintenance or child 

6. Remove your spouse as an authorized user on your credit cards

  • This will prevent your spouse from accruing a debt you will be liable for. 
  • Consult a lawyer before closing accounts if your spouse is financially dependent on you.

7. Obtain sole ownership of the debts you are accountable for

Transferring credit card balances to another card and refinancing debts are two ways to accomplish this. Maintain at least minimum payments on accounts that can influence your credit while you, your spouse, and your attorneys work out the details or wait for the court's final ruling.

8. Learn to manage your money

You must learn to manage your own money. If you're the type of lady who relies solely on her husband for financial support, you're probably in a lot of trouble right now. Stick to a budget so you can keep track of your monthly income and expenses and see where your money is going. Keep track of your utility bills so you don't forget to pay them and end up paying late fees and penalties.

9. Pay off debt and keep your balances low

Your credit utilization rate is one factor that can hurt your credit score. Working to pay down your credit card debt aggressively is another method to protect or improve your credit. You can consider payday loan relief to get out of high-interest-rate payday loan debt. Once it's paid off, try to keep your balances as low as possible. It is recommended that you should not utilize more than 30% of your credit limit.

10. Make room for extra income

Even if you are employed, hunt for additional sources of income, especially if you have a child to support. You must endeavor to enhance your income resources so that you do not need to borrow money and be liable to repay with interest rates now that your husband is no longer available to share your financial burden.

11. Always pay your bills on time

  • Pay bills on time for a good credit score. If you and your ex-spouse had joint debt, be sure you know who is accountable for what so you don't fall behind on payments.
  • Review your divorce paperwork if you're unsure. Both of you have gone through debt division as part of the divorce process, and your divorce order should spell out who is responsible for what.

Your credit score will not be impacted directly by filing for divorce. You can get an indirect impact on your credit score. 

You may have purchased property together even if you don't have shared bank accounts or credit cards. 

Knowing how your financial decisions in the past and the future post-divorce can affect your credit score is a critical first step in keeping your good credit or recovering a damaged credit score. 

Lyle SolomonAbout the Author, Lyle Solomon:

Lyle Solomon has extensive legal experience as well as in-depth knowledge and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific's McGeorge School of Law in Sacramento, California, in 1998, and currently works for the Oak View Law Group in California as a principal attorney.

Do you have questions about how divorce may impact your ability to obtain mortgage financing?Certified Divorce Lending Professional's (CDLP™) knowledge and experience can help make the transition much smoother and more successful for all parties involved.

Working with a Certified Divorce Lending Professional (CDLP® ) and incorporating Divorce Mortgage Planning into the divorce settlement may help both spouses obtain new mortgage financing post-divorce. 

Contact a CDLP™ today for a copy of the Divorcing your Mortgage Homeowner Workbook, a guide to credit, real estate, and mortgage financing after divorce. This workbook will help you get organized, be prepared, and understand your mortgage financing position whether you are needing to refinance the marital home in an Equity Buy-Out situation or prepare to sell and purchase a new home post-divorce.

This is for informational purposes only and not for the purpose of providing legal or tax advice. You should contact an attorney or tax professional to obtain legal and tax advice. Interest rates and fees are estimates provided for informational purposes only and are subject to market changes. This is not a commitment to lend. Rates change daily – call for current quotations.  The information contained in this newsletter has been prepared by, or purchased from, an independent third party and is distributed for consumer education purposes.

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