Too many individuals applying for financing after a divorce – trying to buy their own houses, for example – have been surprised to find that their credit ratings are marred, thanks to the actions of their spouses. If you are going through a divorce, the most important thing to understand is that joint debt means inextricably linked credit ratings until your obligations are separated. Remember that just because a court orders your spouse to do something is not a guarantee that he or she will follow through. There will be consequences for the non compliant partner, but it’s up to you to protect your own credit score in the meantime.
In order to be proactive about your own financial obligations, identify which of your accounts are joint accounts and, if possible, close them immediately. If there is outstanding debt owed on a joint account, you can try to freeze the account so that no one can use it. You can then transfer the account into a single name – if both of you agree. While in the process of closing or freezing joint accounts, make at least the minimum payments, even if the account is to be in your spouse’s name. Failing to do so will directly impact your credit rating. Also, now is the time to get a credit card in your own name if you don’t already have one.
If your mortgage is in both of your names, the best option is usually to sell the house and pay off the mortgage. Alternately, you could refinance the mortgage in just one of your names, and that person will become solely responsible for repaying the mortgage. Be sure to keep mortgage payments current during this transition – even if the payments aren’t your responsibility. Until the refinancing is final, missing payments will still affect your credit. Finally, be sure not to remove your name from a title when a loan is still in your name – this action will remove your name from the ownership of the item, but not from obligation to repay the debt.