How to Manage Your Credit During a Divorce

A man and a woman sitting on opposite ends of a couch, each holding financial papers.

Changing your marital status doesn't impact your credit. But the big changes to your personal finances that often come with divorce can absolutely have an impact. During and after a divorce, your credit may be affected because your household income is affected, your normal bill-paying is disrupted, and your finances and debt may be unclear. Take proactive steps early on to keep your credit on track—and set a course for financial independence moving forward.

How Will Getting Divorced Affect Your Credit?

Your credit report doesn't show your marital status, so a divorce won't appear anywhere in your credit history. It's also not a factor that affects your credit score. But that doesn't mean a divorce can't impact your credit indirectly if it, for example, causes you to fall behind on your debt payments.

The first thing to know is that divorce doesn't automatically split up the credit you and your former spouse established together. Even if your debts (and the responsibility for paying them) are assigned as part of your divorce decree, creditors still hold you liable for the debt. This also means account information, including negative items such as late payments and high credit utilization, can be reported to the credit bureaus and added to your credit report if you are still associated with the account. So if your ex agrees to make payments on a joint account and then doesn't, those late or missed payments can show up on your credit report as well as theirs. If they default, you are jointly responsible for their debt.

How Do You Manage Debt in a Divorce?

Even though the divorce itself isn't relevant to your credit status, the way you resolve and manage your joint debt and credit accounts can make a difference. Your good credit can survive a divorce. For the sake of your financial—and emotional—equilibrium, it helps to take early steps to manage and protect your credit.

  • Create a plan. As soon as possible—even before you separate, if you can—try to work together to take stock of your joint credit accounts, loans and other bills and decide who will take charge of paying each one. If savings accounts are intertwined, figure out a way to divide assets, possibly by determining how much each person contributed to the account.
  • Close or separate your accounts. To simplify things, pay off and close joint accounts wherever possible. When that's not feasible, talk to your lender or card issuer about converting to an individual account by removing your ex-spouse as an account holder or authorized user. You also want to remove your name from any open accounts your ex plans to continue using.
  • Be responsible. Until your accounts are fully separated, you and your ex have the potential to run up joint debt and/or damage each other's credit. Your divorce process will go far more smoothly and your good credit has a much better shot at staying intact if you act responsibly now. While you are sorting things out, make at least your minimum payments on time. And don't rack up any debt you don't intend to repay yourself.

Monitoring your credit is a good practice during this time as well. Not only will it help you check on the status of your accounts (whether you've closed or converted them), but it also allows you to see any missed payments or other negative information—as well as any inquiries or new accounts.

Can You Remove a Mortgage After a Divorce?

If both you and your ex are named on your mortgage, credit bureaus cannot remove the account from your credit report. You are still liable for the loan, even if your divorce decree assigns responsibility for payment to your ex.

Continuing to hold a mortgage with your former spouse isn't ideal. The loan will continue to show up on your credit report as well as theirs, possibly restricting either party's ability to get a new home loan in the future. If your ex makes late payments or—worse—defaults, your credit will be damaged as well. Having a joint mortgage is an ongoing responsibility you may prefer not to share, or may make things more difficult going forward.

But it isn't always simple to remove one spouse or the other from a mortgage. If you qualified for the loan together, your lender probably won't be willing to simply remove one party from the loan. Instead, you may have to refinance, sell your home or pay off the loan in order to make a clean break.

How to Rebuild and Establish Your Credit Independently

If you established credit before you got married and maintained a solid credit history and score throughout your marriage, you may emerge with your good credit intact. But if your credit was tied to your spouse—along with your income and assets—rebuilding or establishing credit can be a key challenge after divorce.

  • Start small and build. Improving your credit score takes time. You may have to start with a small credit limit or even a secured credit card. Use your card for a few purchases and always pay your bills on time. After six months, you may be able to be approved for an unsecured card, or your card issuer might convert your account and refund your security deposit. If not, keep managing your card responsibly and try again in another six months.
  • Find a cosigner. If you need help getting approved for a loan, consider asking a friend or family member with established credit to cosign. If your credit improves, you may be able to refinance on your own at a later time.
  • Maintain a positive payment history. Your payment history is the single biggest factor in determining your credit score; it accounts for 35% of your FICO score. Even one late payment can set you back, so pay every bill on time.

Help may be available if you're having a hard time paying your bills. The nonprofit National Foundation for Credit Counseling (NFCC) can help you establish a budget and repay creditors. Or look for other nonprofit organizations that provide low- or no-cost credit counseling and financial management training. Just be wary of for-profit companies that charge a substantial fee in exchange for a "quick fix" to your credit problems.

Moving Forward

Divorce is a financially tumultuous time. But if you take steps to protect your credit, sort out your loans and credit accounts, monitor your credit activity and score, and work to establish or rebuild your individual credit, you can keep your possibilities open while minimizing risk and damage. Weather this storm and get on with your financial life.

Learn More About Credit and Debt During a Divorce