Protect your Credit in Divorce

As you review the information on each credit report, create a list of all joint accounts, including credit cards, store charge cards, car loans, mortgages, and any other types of credit or loans that list both you and your former (or soon to be ex) spouse jointly on the account. Once you have identified all of the joint accounts, immediately take steps to either close those accounts and pay them off in full, or have your name (or your ex-spouse’s name) removed from the account(s), based on who is responsible for paying them off, according to your divorce settlement.                    

Even if a judge has stated that as part of your divorce settlement, your ex-spouse is completely responsible to pay off specific outstanding loans or credit card debt, for example, as far as the credit bureaus, creditors and lenders are concerned, as long as both names are listed on the account, both people are equally responsible for that debt.                     

If your ex-spouse is late on a payment, or an account goes into a negative standing, it will impact your credit score and credit history as long as the joint accounts remain intact. This could take months, perhaps years to fix, and will hurt your ability to obtain new credit cards or loans in your own name.                

One of the biggest mistakes recently divorced individuals make is assuming their former spouse will close the joint accounts, pay them off in full, or separate the accounts legally. Often, this is not the case and both people wind up damaging their credit rating and seeing a dramatic decrease in their credit score.            



Jason R. Rich is the series editor and author of "Entrepreneur Magazine’s Personal Finance Pocket Guides." To learn more, please go to www.JasonRich.com.