4 ways to protect your credit in divorce | Refresh Financial

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4 ways to protect your credit in divorce

I remember my parents going through divorce when I was 11 years old. There was a lot of stress, resentment, anger and remorse, and I was stuck in the middle of it all. Fast forward 30 years, and the mutual debt my parents incurred still haunts them today. They wish they had been safer and smarter with their finances.

It’s normal to get tied down with the emotional challenge of divorce, and to rise above that, let’s bring credit to the forefront of the divorce journey. There are four ways to protect your credit while going through divorce so that you remain safe not sorry.

1.    Your joint debt is your responsibility

If you have joint debt during marriage, you are both responsible for it, and responsibility continues for the debt even after divorce. A divorce doesn’t affect your agreements with your lenders. For example, if you have a co-signed credit card and one of you takes over the card after divorce, you are both legally responsible for the debt on the card. If one of you falls behind on payments, then it will impact both your credit scores.

It’s a good idea to go through all of your joint credit accounts, cancel them, and transfer the remaining balance to a card in the name of whoever’s responsible for the remaining debt.

Know where you stand and check your credit score.

2.   After or during divorce get credit in your own name

Go through all your joint credit cards and cancel them or transfer ownership of the card and the balance. Next focus your attention on building your own credit. Start by finding out what your personal credit score is. If you don’t have an established credit, there are some great options to consider when building your credit. When looking for credit card options, start your search by looking for a credit card with a low interest rate, low annual fee, and a small credit balance.

See secured credit options with Refresh Financial. These options can help you stay within a budget and your credit activities are tracked and reported to the credit bureaus.

3.    During divorce open your own checking account 

If you don’t already have a checking account, protect yourself by opening one in your own name. Start depositing your pay into your new account. Make sure all your automatic payments for bills are coming out of your own checking account, so you’re not hit with late payments fees once you close your joint account.

With joint accounts, both parties have access to them and can do whatever they please. Unfortunately, this could lead to a former partner draining the joint account. It happens more often than you think -- divorce is stressful and emotional!

Learn about credit monitoring. This will help you stay on top of your credit score.

4.    Change passwords and update address information

The last things on your mind when going through divorce are PINs and passwords; however, securing your information will help you get added piece of mind. Start by updating the PINS on your debit cards and the passwords on all your online banking accounts.

If you have already moved out of the home you shared with your former partner, make sure to update your address with all of your financial institutions, bill collectors and creditors. You want to make sure that you get your bills and credit details sent to your new address, which will help you add a layer of privacy and security against your former partner accessing your financial information.

The 4 steps outlined above will help you protect your credit and start to build your credit score during divorce – be safe, not sorry.

Shenaya Sweetman is the Content and Social Media Specialist at Refresh. She's an avid writer with an interest in real estate, saving and investing for an early retirement. Passions include online health coaching and live fitness instruction. Her favourite finance blogger is Michelle Schroeder-Gardner.

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