As you go through a divorce, it is important to pay attention to your finances. Settling a divorce can be expensive, and not paying attention to your current financial state can result in your credit score taking a dive. There may be a lot going through your mind during this time, but if you get your finances situated beforehand, it will be one thing that is off your mind. Here are a few ways you can safeguard your credit while going through a divorce:
Know the status of credit accounts
Being aware of the balances on your accounts is always a good idea, but when going through a divorce, you should be even more aware of your lines of credit and assets. While you were married, some accounts may have been forgotten, such as a department store credit card you signed up for during one Christmas or a rewards card you were expecting to use more often. If you are not sure about all your lines of credit, you can order a credit report to check the status of all the accounts in your name. Your report can be a great guide to helping you protect your credit during this trying time.
Remove authorized users
Once you have gotten yourself reacquainted with all your lines of credit, check for ones that have your spouse listed as an authorized user. If this is the case, your partner can still use the accounts and is not responsible for paying back the debt. If your spouse is negligible with any of these accounts, you could see the limit be quickly met and your credit score will be affected in the process. Speak with your credit provider and see if you can get your spouse removed as an authorized user.
Tweak joint accounts
Along with removing your spouse as an authorized user, you should also make sure that you no longer have any joint accounts. These can be practical for married couples to help build credit and make large purchases, but like an authorized user, your credit score can be affected if you or your spouse don't spend wisely. This process is a bit more complex than taking off an authorized user, so you will have to do some maneuvering.
To help alleviate this situation, try paying off the debt of this account as much as you can. When you see that your balance has dwindled significantly, transfer the remainder to another card in your own name. This may work in your favor because you can see if you can get a lower interest rate at the same time. But be warned that you have to pay a transfer fee for this process at some banks, which is a percentage of your balance.
Come to agreement with your spouse on some accounts
As stated previously, transferring certain joint accounts may be a bit more difficult than others. For instance, if you have a mortgage that both of your names are on, it will be tough to close down this account or transfer it to a single account. As being stuck with the entirety of your mortgage may create a tricky financial situation, try to work out an agreement with your spouse to solve this problem. Defaulting on this type of loan can have major impacts on your credit score, so it is best to compromise.
Request that the lender send you a copy of the account statement each month and see if your spouse is holding up his or her end of the bargain. This way, you can continue to make payments and protect your credit score in the process.