How to Protect Your Credit After a Divorce

Will a Divorce Affect My Credit Score?

No, filing for a divorce will not directly affect your credit score. However, financial issues associated with your divorce might indirectly affect your credit. Typically, married couples have joint finances and shared accounts. Even if you do not have shared bank accounts or credit accounts, you may have purchased property together. Understanding how your financial decisions in the past and moving forward post-divorce can affect your credit is an important first step in protecting your good credit score or rebuilding a damaged credit score.

What Negatively Impacts Credit Scores

There are three nationwide credit bureaus in the US: Equifax, Experian, and TransUnion. Your credit report will include your credit history, debt, and other related financial information. This information is then used to calculate your credit score (your credit report does not include your credit score). Credit scores typically range from 300-850. The higher your credit score, the better it is. Companies and lenders use your credit score when making lending decisions and when determining interest rates. You are entitled to receive a copy of your credit report each year for free.

Several things can negatively affect your credit score, including:

  • Missed and late payments
  • Defaulting on an account
  • The amount of debt you have
  • Your credit history
  • Types of credit you have
  • Recently opened accounts

How to Protect or Rebuild Your Credit After a Divorce

Going through a divorce can be expensive. Additionally, as you work to disentangle your finances from your former spouse's, it's very easy for things to get lost in the shuffle or to have confusion over who is responsible for what. The first step to protecting or rebuilding your credit after a divorce is to know what your credit score is and what is currently impacting it.

Keep reading for more tips on how to protect or improve your credit score after a divorce.

Request Your Credit Report & Make Necessary Corrections

According to federal law, everyone is entitled to a free annual credit report. If you haven't already, you should request your free report from the official site, annualcreditreport.com. Once you receive your report, you should verify that all of your information is correct and current. If you notice any errors, you should request that the credit reporting agency fix them as quickly as possible. Also, be on the lookout for signs of fraud or identity theft.

To learn more about requesting your credit report and making corrections, review the usa.gov informational page here.

Know Your Credit Score

In addition to requesting your free credit report, you should also keep an eye on your credit score. You can often find your credit score on your credit card statement or through your bank. Many banks offer credit monitoring services, and you can get alerts when your credit score changes. If you notice a sudden drop in your score that you cannot explain, investigate it immediately.

Always Pay Bills on Time

One of the best ways to protect your credit score is always to pay your bills on time. If you and your former spouse had shared debt, make sure you know who is responsible for paying for what so that you do not miss a payment. If you are unsure, review your divorce papers. As part of the divorce process, you and your ex will have gone through debt division, and your divorce decree should outline who is responsible for what.

Pay Special Attention to Joint Accounts

Even if you are not responsible for a specific account yourself, if it is attached to a joint account or shared loan, you want to monitor the account to ensure that your former partner is making the payments on time. If they fail to make payments, your credit may suffer as a result. If you can, close joint credit accounts or remove your spouse as an authorized user.

Pay Back Debt & Keep Balances Low

One thing that can negatively affect your credit score is your credit utilization rate. Another way to protect or rebuild your credit is to work to pay down your debt aggressively. Once it is paid down, do your best to keep balances low. It is recommended that you not use more than 30% of your available credit.

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