How Divorce Can Affect Your Credit Score and What to Do About It

Going through a divorce or separation is stressful enough without worrying about your credit. Yet the financial side of splitting up can have a lasting impact on your credit scores if you aren’t careful. Many middle-class consumers assume that once they are no longer married, they are no longer responsible for debts their ex-spouse runs up. That is not how credit reporting works. Joint accounts remain joint until they are officially closed or removed, and lenders can still hold both parties liable. Understanding how divorce affects your credit is the first step toward protecting yourself.

The biggest danger comes from joint credit cards, joint loans, and accounts where one spouse was an authorized user on the other’s card. In a joint account, both people are equally responsible for the debt. If your spouse stops paying, the missed payments will show up on both of your credit reports. Even if you have a court order saying your ex must pay a certain credit card, that order does not bind the credit card company. They will still come after you for the money, and they will report late payments under your name. The only way to prevent this is to close joint accounts or remove yourself from them before the divorce is finalized.

Another common trap is keeping a mortgage or car loan in both names because one spouse wants to stay in the house. Lenders generally will not let you remove a borrower from a loan without refinancing. So if you and your spouse have a joint mortgage, and you agree that your ex will keep the house, you are still on the hook if they stop paying. Your credit will suffer with every missed payment, even if you do not live there. The safest move is to sell the home or have the spouse who keeps it refinance the loan into their name alone. That may not be possible if their income or credit score does not qualify. In that case, you have to weigh the risk of staying on the loan.

Authorized user accounts are also tricky. If you put your spouse as an authorized user on your credit card, you can simply call the issuer and remove them. That stops them from charging new purchases, but any existing balance is still yours. If your spouse was the primary account holder and you were the authorized user, you have fewer rights. The primary holder can remove you at any time, and you lose the benefit of that account’s history on your credit report. Worse, if the primary holder runs up the balance and stops paying, your credit can still suffer if you are a joint account holder—though as an authorized user you generally are not liable for the debt. However, credit scoring models sometimes factor in high balances on authorized user accounts, so it pays to get removed promptly.

During the divorce process, it is smart to check your credit reports from all three major bureaus—Equifax, Experian, and TransUnion. You can get free weekly reports from AnnualCreditReport.com. Look for accounts you forgot about, especially store cards or loans you cosigned years ago. If you find accounts you did not open or balances you did not expect, dispute them immediately. You may also want to freeze your credit at all three bureaus. This prevents either spouse from opening new accounts in the other’s name out of spite or confusion. A credit freeze does not affect your existing accounts, but it blocks new credit applications unless you lift the freeze temporarily.

Negotiating how to handle joint debts should be part of your divorce settlement, but remember that the settlement is a contract between you and your ex, not with lenders. Include specific steps: which accounts will be paid off and closed, who will refinance which loans, and a timeline for removing authorized users. Even then, monitor the accounts for the next year to make sure your ex follows through. If they do not, you have legal recourse to enforce the settlement, but your credit may already be damaged.

Finally, consider your own credit building during and after the divorce. Open a credit card in your own name as soon as possible to establish a history separate from your ex. Keep balances low and pay on time. If your credit takes a hit from a joint account gone bad, focus on the basics: always pay at least the minimum on any card you control, keep utilization under 30 percent, and do not apply for multiple new cards at once. Time heals most credit wounds, and a few years of good habits will outweigh the damage.

Divorce is hard, but your credit does not have to be a victim. By acting quickly to separate your finances, freezing your reports, and monitoring activity, you can minimize the blow and rebuild your credit on your own terms.