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Protecting credit scores during divorce

Credit scores determine much of what a person has access to. From securing an auto loan to finding reasonable housing, credit scores can either help or hinder an individual get to where he or she wants to be. For these reasons, California couples might be worried about filing for divorce. While the divorce process does not affect credit scores, actions taken during and after certainly can.

Joint debt is fairly common in marriages. In general, debt that a couple takes on during marriage is considered marital property, which must be divided between both parties. However, even if one person is tasked with repaying a certain debt while the other is responsible for other obligations, any issues may ultimately come down to the whose name is on the debt. This means that even if an ex is responsible for repaying a loan, a creditor can still come after his or her ex-spouse for nonpayment, which affects credit scores. When possible, refinancing loans in only one persons name can be helpful.

Another way an individual can protect his or her credit score during divorce is to open up new lines of credit during divorce. While it might feel counterintuitive to establish and use new lines of credit during what may feel like a financially fragile time, doing so helps build and fortify a persons credit score. This is especially helpful for individuals who have little to no credit history because they did not work or their spouses took care of the household finances.

Pulling a credit report as early on in the process as possible will give individuals a baseline understanding of their credit scores. Not only is it a good idea to understand what a persons score is, but it also provides him or her the opportunity to make decisions that support financial goals. These types of proactive steps can help people in California traverse the divorce process as successfully as possible.

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