A Texas divorce usually requires spouses to divide everything 50/50. Unfortunately, this also includes debts, so your credit score can be affected during and even after your divorce.
How divorce affects credit
Even if your spouse was the one who racked up all the debt and you present a copy of your divorce decree to creditors to show that, it won’t matter to them. As long as your name is on the credit account you and your former spouse jointly held, creditors can still gain a judgment against you to repay what’s owed. This can negatively impact your credit score.
If you and your spouse have joint credit card accounts, they will remain on your credit reports even after you’ve gotten divorced. Just as creditors don’t care about your divorce decree, they will still view you as equally responsible for paying back debt on those joint accounts. If your split was amicable, you can ask your former spouse about separating those accounts to preserve your credit. However, if your divorce was contentious, this won’t be an option.
Protecting your credit during a divorce
All hope is not lost as you can take steps to protect your credit when planning to divorce. It is important to note, however, that any changes you make to your accounts often must be made prior to filing for divorce. This is because the accounts are usually frozen at the time of filing.
Suggested steps may include the following:
- Close joint credit card accounts and open a new one in your name alone.
- Freeze your credit reports to prevent your former spouse from trying to get revenge by opening new ones in your name.
- Open your own savings and checking accounts and deposit most of the cash into the former.
- Try to find a bank that has a generous interest rate on savings accounts. You might want to consider an online bank because they’re more likely to offer this perk compared with brick-and-mortar banks.
Being proactive about your finances prior to filing for divorce may lessen the impact on your credit.