Not only can divorce be an emotional struggle for the parties, it is often a significant financial struggle as well. With so many matters to deal with, maintaining your good credit score is an important component of your transition into a new life after the marriage is dissolved. Having a good credit score after the divorce is essential for borrowing money on reasonably good loan terms for a mortgage or vehicle, for renting an apartment or house, to get good rates on insurance policies, and even for employment opportunities. Yes, potential employers frequently pull your credit report to learn what kind of spending habits you have and how reliable you are when it comes to money. To help you stay in control of your good credit score or help you improve your credit score after the divorce, we have a few divorce credit tips for you.
A shopping spree is not a “feel good” solution to relieving stress in a divorce. By doing so, it may appear that you are attempting to sabotage the other party’s credit-worthiness. And if it’s your account and you have difficulty paying the bill, you’ll be sabotaging your own credit-worthiness.
Until the divorce is final, the other spouse will still have access to joint credit cards and charge cards. If your spouse promises to pay the credit card bills, make sure that he or she actually does so. Keep very close track of all accounts that your spouse has access to, you don’t need any surprises about past due or over limit accounts.
The division of debts is a part of every divorce. You may want to be the more responsible party and take on the lion’s share of the marital debt. But don’t take on more than you can realistically afford to pay. Altruism aside, when you have a choice, don’t accept an additional obligation that will over tax your finances after the divorce.
Under Arizona’s community property laws, if a debt was incurred during the marriage, then it is a marital debt and the liability is shared equally by the spouses. If you have a separate credit card account and your spouse is an authorized user, then consider removing him or her at your earliest opportunity. An authorized user on a credit card can make charges but isn’t obligated to pay the account. If you are an authorized user on your spouse’s separate credit card, then you probably want your name removed, too. Your spouse’s poor payment history or default on that account may spill over onto your credit report, negatively affecting your post-divorce credit score.
Whenever possible, you want to immediately close out joint accounts with your spouse. That is not always possible immediately after the divorce, however. To protect yourself, make sure that you receive regular statements from the lender or credit card company so you have notice if there is a payment problem before a complete default occurs. For example, your former spouse may be keeping the marital home where your children will continue to reside. If there is a mortgage on that home, then almost certainly both of you are obligated. Until the other spouse gets a new loan in his or her name only, you’ll still be a borrower on the promissory note and still liable to the lender if the payments are not made.