Divorce affects some of the most crucial aspects of our lives; it changes our family dynamic, divides our property and ends a significant relationship. However, divorce modifies all the little details in our daily routines.
One of those details is our credit score. It’s easy to overlook credit scores amid a costly separation, but if you do not protect your credit score during a divorce, you may end with considerable challenges in the future.
Joint accounts create joint problems
Most spouses have good intentions when they start a joint bank account or a shared credit card. Oftentimes, joint finances create problems for former couples because divorce does not automatically dissolve shared accounts.
In Colorado, the court uses equitable distribution to divide all marital property, including bank accounts and shared finances. The judge ultimately splits the accounts in a “fair" manner instead of equal portions. For example, if your spouse racks up debt on their credit, the court will make your spouse responsible for personal debt.
However, the division process is trickier when it comes to shared accounts. It’s possible to end up with a significant portion of your spouse’s debt and have creditors come after your income. It’s also possible to see your former partner’s late payments show up on your credit score if it’s tied to a joint account.
Protect your credit first
There are ways to protect your credit information during divorce proceedings. First, you will want to close all joint accounts and credit cards with your spouse. You do not want them to be an authorized user on any of your cards either.
Even after you remove your spouse as an authorized user, you will want to work with your spouse to separate any major loans or sell the house or car to pay off those loans. It improves both spouses’ credit scores and reduces the aggregate amount of debt.
A damaging divorce does not have to affect every aspect of your life, especially your credit score. You need to take the right steps to ensure your score is protected, and you are ready to move on to the next stage of your life.