Anyone getting divorced must be vigilant to prevent their credit from being crushed in the process. Consider the following all-too-common scenarios:
Nobody Pays the Joint Credit Card
In a divorce settlement, the parties will typically settle who will pay certain debts. If, for example, the ex-husband is required to pay a joint credit card debt and fails to do so, the account can be sent to collections. That would do major damage to the credit records for both the ex-husband and the ex-wife, even if the ex-wife had no idea it was happening.
The Car Payments Become Overwhelming
Let’s say the ex-wife is awarded the family car, but she is required to take over the payments. Those payments may have been easy for the couple to make. Now, however, she is moving to a new home and relying entirely on her own income and she winds up making late payments and getting reported. Late payments are a significant hit on a credit report.
Suddenly Maxed Out
Let’s say a husband and wife typically relied on the wife’s large credit limits, and the husband only had one card and that was close to maxed out but it was not a big deal for the couple. After the divorce, the now-ex husband only has that one credit card to fall back on and it is maxed out. The level of available credit is a part of a credit score, so having his only available credit card maxed out is going to hurt him.
Clean Slate Not so Great
Many couples have one spouse that controls finances and is not always careful about getting both couples named on the accounts. For example, it is not unusual for a husband to have only his name on the mortgage and the only credit card, while the wife relies on the family checking account. Post divorce, the wife in this scenario could have almost no credit because she did not build up her own history while she was married, and credit history is a component of a credit score.
Protect Your credit records
Credit scores should be a major concern during the divorce process. Both parties should think about their personal credit history and have any concerns addressed in the divorce decree. Here are some of the most important things to do:
Make sure your name is no longer listed on any account controlled by your ex.
Make sure you have some access to credit, and be sure to establish a good history on those accounts.
Make sure all the payments you take on in the divorce decree fit inside your budget, and do not forget to factor in new costs like moving and buying new furniture.
It is easier than ever now to get a detailed credit report for low or no cost, and you should closely review all reported accounts to make sure nothing is unaccounted for.
Many divorced people have to stay in touch with their former spouse because they have children together. Do not lose track of child support owed under your divorce decree and avoid paying for children’s items that are not your responsibility and expecting your former spouse to pay you back.