When you file for divorce, you expect your life to change. You will no longer be living under the same roof as your former spouse, your standard of living may be different, and many social routines will change. What you may not anticipate is how your FICO score will be affected.
The simple act of filing for divorce will not harm your credit rating, but if you don’t disentangle yourself financially from your spouse or try to live within your changed means, then problems could arise later on. Below are some measures you can take establish and preserve financial independence.
Create a budget
If you were a stay-at-home parent prior to the divorce, then it may be awhile before your earning ability allows you to resume the lifestyle you were previously accustomed to. Or, if you are paying spousal and child support while maintaining your own household, then your income will be stretched thin. In either case, you have to cut out unnecessary expenses to ensure that your bills get paid on time, as late payments will lower your credit score.
Close or reassign joint accounts
Any joint accounts that you hold with your spouse, such as checking or savings accounts, mortgages, and car loans, should either be closed or transferred into the name of one person only. If your spouse agrees to take over the car payments, for example, and then defaults, then your credit score will be harmed because your name is still on the account.
Close joint credit cards
If your spouse’s name is on any of your credit cards, then remove him or her immediately, even if you don’t like to think that they will do something vindictive. You’ve likely heard stories about angry people maxing out their spouse’s credit cards to punish them for having an affair or initiating an unwanted divorce. If your spouse is merely an authorized user on the account, then they are not liable for any resulting debt, and can spend to their heart’s content while you suffer the financial consequences.
Monitor your credit
Sign up for a credit monitoring service to keep an eye on any unusual changes to your credit profile. If your former spouse does manage to incur an unauthorized debt in your own name, then the sooner you are aware of it the sooner you can initiate an investigation and dispute and thereby undo any damage to your credit.
After any joint bills are paid off, you can focus on your personal expenses and living within your post-divorce budget. If the separation is relatively amicable, then you may not have to worry about your former spouse trying to damage your credit, but you will want to monitor it regardless, so you always know where you stand when it comes to loan eligibility and other credit-related opportunities. If you have any divorce-related questions, then do not hesitate to set up a free initial in-person consultation with Jayson Lutzky. He is a Bronx attorney who handles divorce and family court cases in New York. Call 718-329-9500 or visit www.MyNewYorkCityLawyer.com to set up an appointment.