One of the hardest things to when you get divorced is the impact of the divorce on your credit score.
The harsh reality is that — unless you’ve always kept your credit separate from that of your spouse — you’re probably going to have some problems untangling your finances.
Here are some of the most important things to understand about your credit before you get divorced:
1. You probably can’t qualify for the same sort of credit after your divorce that you did before you were divorced. Most couples provide their total financial information when they’re asked how much they earn each month — which means you probably included income your spouse was bringing in. Once that’s no longer part of your net monthly income, companies may be far less generous with the credit they’re willing to extend you. Be prepared for a lower credit limit as you convert joint accounts to individual ones.
2. California is a community property state, which means that all the debts you and your spouse acquired during the marriage are yours to share — at least as far as the credit card companies are concerned. It doesn’t matter to the credit card companies what your divorce decree says.
3. You aren’t just responsible for half the debt — you’re responsible for the whole thing if your ex-spouse doesn’t pay. In order to avoid a wounded credit report along with your wounded heart, try to work out a divorce agreement that requires all joint debt to be paid off immediately or refinanced into individual accounts. If necessary, you and your ex could each apply for bill consolidation loans through your credit union or bank and try to separate your joint debts that way.
4. Don’t forget to remove your spouse as an authorized user on any cards that you hold individually once you separate — or that next bill you get in the mail could come with a painful surprise.
Dealing with the financial aspects of a divorce can get very tricky because the debts you owe could be harder to split than the assets you own. An experienced attorney can provide assistance with property division, including debts.
Source: FindLaw, “Credit and Divorce,” accessed Aug. 10, 2017