How to Protect Your Credit During Divorce or Breakup

Going through a divorce or breakup is like being strapped into an emotional rollercoaster. Unfortunately, most people going through a split also face serious financial challenges, especially when they share accounts, credit cards, and debt with the former partner.

Even if you and your former partner mutually agreed to go your separate ways, unresolved joint debts can negatively impact both of you.

Knowing how to protect your credit during a divorce or breakup can minimize the damage you incur. However, you have to act quickly and communicate with the other party about the financial matters as much as is reasonably possible.

Learn some methods for how to protect your credit score during a divorce or breakup.

How a divorce or a breakup can hurt your credit

A divorce or breakup doesn’t appear on your credit report, but the financial changes that come with it can affect your credit history. The more intertwined you and your partner are financially, the greater the risk of serious damage for both of you.

Shared credit cards, personal loans, and auto loans are the shared responsibility of anyone who is listed on the account until they are paid off or refinanced.

Imagine you and your former partner are jointly listed on two auto loans. During the split, each of you agrees to keep one of the vehicles, but your ex misses a few payments. In this scenario, your score would be negatively impacted, even though your former partner agreed to take over those payments.

You should take certain steps during the separation process to protect yourself from this situation.

Close or separate joint accounts

One of the first steps during a breakup is to review every account you share and separate them as quickly as possible. Pay off joint credit cards or personal loans whenever possible. If closing an account isn’t an option, work with your lender to determine whether one person can assume responsibility for the balances.

Using the auto loan example, if each of you agrees to keep one of the vehicles, each party should refinance the vehicle they are keeping in their name. If that’s not possible due to a court order or other circumstances, you may have to wait until the divorce is finalized.

Remove yourself as an authorized user

If you’re only an authorized user on your former partner’s credit card, request to be removed as soon as possible, and vice versa if they are an authorized user on any of your cards. An authorized user isn’t legally responsible for the debt, but they can still use the card. You want a clean split financially.

Make sure you update all of your credit cards to address this issue. You don’t want any surprise charges on your accounts.

Monitor your credit reports closely

In the months following your split, monitor your credit reports and score more closely. Look for:

• Accounts you don’t recognize
• Incorrect or unusual balances
• Late payments
• New credit inquiries

Hopefully, both parties will do the right thing. However, you still need to protect yourself against unauthorized use of your financial information.

Pay all bills on time, even disputed ones

During a divorce, it’s common for couples to disagree about who should pay certain bills. This standoff hurts everyone since creditors don’t care about those disagreements.

If your name is on a loan or credit card, missing payments will hurt your score and make it harder to get favorable financing terms in the future. Protecting your payment history and credit profile should be a major priority. While you don’t want to pay debts that you believe your ex should be responsible for, you need to safeguard your financial future.

Payment history is the most heavily weighted scoring category in most models, including FICO. Even a few missed payments can tank your score and take months or years to recover from.

Refinance shared debts into one person’s name

Whenever possible, refinance joint loans so only one borrower holds them. This applies to auto loans, mortgages, and personal loans. When you refinance, the other person is no longer legally responsible for the debt. If the split is amicable, work with your ex-spouse to divide the debts as fairly as possible.

Freeze your credit if you suspect misuse

If the split is not amicable and you are concerned that your ex may open accounts in your name, freeze your credit. A credit freeze restricts access to your credit file, which makes it much harder for someone to open a new account without your permission. If you need to apply for new credit, you can temporarily lift the freeze.

You should also request your credit reports to look for signs of misuse.

Rebuild your credit after the split

Once you’ve separated your finances and the divorce is finalized, you can begin rebuilding your credit. Here are a few basics to start with:

• Pay every bill on time
• Keep your credit card balances low
• Avoid unnecessary debt
• Monitor your credit regularly
• Build positive payment history

Despite your best efforts, your score may have dropped during the separation. You can bounce back with consistent financial habits, but the process takes time. Be patient and disciplined as you work to rebuild a strong credit score. A healthy score can serve as a foundation for your next chapter.

How to protect your credit score during a divorce

Divorce and credit score damage typically go hand in hand. However, taking appropriate steps can help you limit the impact on your credit score and bounce back after a tough breakup. It’s in your and your former spouse’s best interests to be amicable and work together to resolve your financial obligations in a fair and practical way.

Unfortunately, working together is not always on the table. Even if both of you are amicable, covering major financial expenses like a mortgage without both people’s incomes can be extremely difficult.

If you’ve faced financial challenges as a result of a breakup or divorce, the next step is rebuilding your credit history. Tools like Kikoff can support your journey. It offers credit-building and budgeting tools, as well as a variety of free resources. Sign up for a free Kikoff account today.