Credit Report

Tips for Managing Credit During a Divorce

Money problems and excessive spending are one of the leading causes for divorce in the U.S.

Further, divorce can complicate your financies even if you didn’t have money woes during your marriage. Protecting your credit before you begin divorce negotiations is essential, especially if you have a high-asset divorce. Working with your Fort Worth divorce attorneys can help you navigate credit issues and minimize or possibly even avoid any credit problems that may occur following the final decree.

Common Credit Issues Post-Divorce

Realize that you will have less income after your divorce, so you may have to control your spending. Not doing so may lead to overextending your credit. With only one income, you’ll have lower credit limits too.

Devise a plan to handle the debts you currently have. If you have joint accounts and your ex-spouse doesn’t pay their share, missed payments can negatively affect your credit report. The same is true if you and your spouse hold a mortgage together. Even if the divorce decree assigns payment to your ex-spouse, your credit can suffer due to nonpayment.

How to Manage Credit After Divorce

Take the proper steps early in divorce negotiations will help avoid negative, financial consequences later. Review what you need to do with your divorce lawyer to ensure that you have all the bases covered. The following are among the general steps you should consider.

Review Your Credit Report Early and Often

Regularly pull your credit reports from all three reporting agencies; Experian, TransUnion and Equifax, to see which accounts include your name. You’ll remain responsible for any debt on those accounts as long as your name is still attached to them.

If your spouse is an authorized user on an account in your name, contact your credit card company to remove your spouse. Similarly, ensure your name is removed as an authorized user on your spouse’s account. Also, monitor your reports to ensure that any accounts have not been newly opened in your name. Keeping track of your credit report can help you avoid additional adverse credit.

Separate Credit Accounts ASAP

Establishing credit solely in your name with only your income as soon as possible is vital. You’ll need to agree with your spouse on when and how to close joint accounts. If you have travel rewards accounts, spend the points or redeem rewards before you close them.

Note that you will probably have a period where some of your joint accounts are still open. Monitor activity on these accounts to look for unusually large or frequent charges that you may want your family law attorney to review. Note recurring expenses, such as streaming subscriptions, that will be affected by closing them.

Closing joint accounts will temporarily decrease your credit score, but it should rebound quickly if you practice good debt management. Once you have closed joint accounts, check to see that these are no longer part of your credit report.

Inform Lenders of Marital Status Change

You should inform any institution that provides credit about the change in your marital status early in the divorce process. Your creditor may help with payment plans or suggest refinancing what you owe into an individual account.

Consider Freezing Your Credit

If you believe your spouse will become vindictive or irresponsible, consider freezing your credit. This step will prevent new credit lines from being opened in your name.

Smooth Divorce Process with Nilsson Legal Group

The Nilsson Law Group can offer compassionate, knowledgeable, and thorough family law services if you seek a divorce in Fort Worth.Your divorce, especially the financial aspects of it, should never be more stressful than it already is. Let our team of divorce lawyers help you make the right decisions as you enter the newest chapter in your life. Contact us today for a free consultation.