How to Protect Your Credit Score and Divorce-Proof Your Finances
If you are going through a divorce, most likely there are lots of things on your to do list, and lots of details to attend to. One of which is to protect your credit score during divorce. Understanding the link between your credit score and divorce can help prevent financial pitfalls. According to a survey conducted by Debt.com, 48% of respondents saw their credit score drop after separating from their partner, often linked to financial strain and changing household incomes. Going from a two-income household to a single-income household can cause a significant change in your financial situation, and this effect may be seen in many unexpected ways.
Especially in recent years, where we have seen inflation and rising interest rates result in significant economic pressures, it is increasingly difficult to manage debt and credit during a divorce. In 2023, credit card interest rates rose to record highs, which might make it harder to keep up with debt payments and maintain a high credit score.
Run Your Credit Report
The first thing you want to do is to run your credit report. You may not like what you see, but it is not one of those things you want to ignore. Hiding your “head in the sand” and ignoring what is there won’t help matters. By running your credit report, you will get a clear picture of your credit score and divorce situation. You can run it by going to this website. annualcreditreport.com or call this number to request it. (1-877-322-8228). Additionally, many credit card companies offer free monthly access to your credit score through online banking, which makes it significantly easier to monitor your credit during the divorce process and beyond.
In addition to getting your score, you can also see all of your accounts. It will list when each account was opened, and if they are still open. It will give your payment history on each account, as well as the balance. By Federal law, you are entitled to receive one free credit report annually. Be careful, there are online sites that will charge you for this service!
Pay Your Bills On Time to Protect Your Credit Score and Divorce
Once you or your spouse are served with divorce papers, you are each still responsible for your own debt (unless the Court issues a different Order). You should open a new bank account in your name only. Also if you are the primary name on a card you used to share, have your spouse’s name removed and let he or she know they are no longer to use that card. If you are secondary on your soon to be ex-spouses card, be sure to get your name off of the card. You might consider closing out any joint accounts and getting a new credit card issued to you. Be sure to discuss this first with your divorce lawyer to be sure he/she recommends this and that doing so won’t violate any Restraining Order issued by the Court.
Common Mistakes That Harm Your Credit Score and Divorce Settlement
Additionally, refinancing joint debts has become more challenging for many due to higher interest rates and stricter lending requirements in recent years. You may want to explore alternative debt management solutions like debt consolidation, which could help you manage your share of debt more effectively. During times of high inflation and interest rates, it’s even more important than ever to ensure you’re paying off high-interest debts like credit cards as quickly as possible. Delaying or accruing interest can quickly increase your overall debt, making it harder to manage your finances post-divorce.
Paying your bills timely is important when it comes to keeping up your credit score. Make sure you review all of your monthly expenses and figure out how you are going to pay them. Often one spouse took on the role of managing bills, and if you weren’t used to doing so, it may take a little adjustment on your part. You certainly don’t want late payments to lower your credit score!
If this is something which you believe you may struggle with, consider using financial management apps such as YNAB ( https://www.ynab.com/) or PocketGuard (https://pocketguard.com/) to track your income and expenses. These tools can help you stay organized and on top of your budget during this stressful time.
Unpaid Divorce Debt
Existing debt that you and your spouse have incurred may be divided between you and your spouse as part of the divorce. Remember that obtaining a Decree of Divorce does not change or absolve a party from a joint contract with a creditor. If a debt goes unpaid a creditor will go after whoever they can to get repaid. An experienced divorce lawyer will talk to you about this. Perhaps as part of the settlement terms you might want to have your spouse refinance any of the joint debts they are assuming responsibility by a given date, or maybe you want to assume a greater part of some of the debt in exchange for more assets.
Now would be a good time to create a budget and do your best to stick to it. Review all of your monthly bills and expenses. Your lifestyle will likely be different after your divorce, and managing your credit score and divorce transition carefully is key. You want to be cautious with your finances to be sure you can cover your expenses, and not end up with late payments.
Things may seem overwhelming during a divorce, but you need to take care of yourself. Managing your credit score and divorce wisely is one of the most important financial steps you can take.
PUBLISHER’S NOTE:
I want to thank Krista Gliszczynski, a third-year student at the University of Dayton School of Law, for drafting this article. Krista is continuing her clerking with MuesLaw this semester. You will be reading more from her in the weeks to come! Well done Krista!
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Attorney Robert “Chip” Mues has been focusing his legal practice throughout Southwest Ohio primarily in divorce and family law matters since 1978. Chip is passionate about family law and has proudly published the Ohio Family Law Blog since 2007. In addition, he previously managing the Dayton law firm of Holzfaster, Cecil, McKnight & Mues LPA until it dissolved on December 31, 2024. He recently has founded MUESLAW in 2025. To learn more about him or MUESLAW, visit www.MuesLaw.com. Appointments are available in person, over the phone or by Zoom. Call us at 937 293-2141.
