When it comes to divorce, it can do a number on your finances. But you want to do everything you can to keep it from harming your credit score. So here’s some tips for preventing credit damage in your divorce.
Preventing Credit Damage
Cancel Joint Accounts
When you go through a divorce, you and your spouse no longer are together. However, if you don’t change your account details, those accounts will keep both parties on them. In this case, your marriage status doesn’t matter. The bank or creditor will only care about whose names are on the account. So that means they can hold you responsible for your ex’s charges, payments, and debt. Therefore, you want to cancel all joint accounts and open individual checking, savings, and credit card accounts.
In addition, you also want to refinance any loans, if possible. If it’s not possible, you can try to drop one name off of the loan. However, this isn’t quite as reliable as just refinancing yourself.
Freeze All Other Accounts
If you cannot close certain accounts, it’s best to then freeze them. By doing this, you can ensure that your spouse cannot make any other purchases or charges on that account. Therefore, this can help in preventing credit damage to your name. After freezing these accounts you want to make sure you sign up for monthly statements in order to monitor them. That way you can be sure your ex makes no additional charges that you may be responsible for.
Update Any Payment Methods
During your divorce, things can get hectic. You’ll have a lot on your mind and paying bills may be one of those things that slip through. Especially if you weren’t the one that handled the finances in your marriage. So you may want to switch to auto-pay when you can in hopes of preventing credit damage. If you already have that, make sure you update your payment methods after opening new accounts. If you don’t, a collector may try drafting out of an old account and be unable to do so, making your payment late.
Don’t Fight for Assets That You Cannot Afford
One way of preventing credit damage is to be smart about what assets you fight for. When going through a divorce, you may feel like you want everything. After all, you’re going through so much change, it would be nice to keep some things the same. But before you fight your ex for the house, cars, and any other assets, make sure you can afford them by yourself.