How Can I Protect My Credit Score During a Divorce?

By Bob Matteucci

Trying to figure out exactly how your divorce will impact your credit score is a lot like trying to decipher the Los Lunas Mystery Stone. There’s no clear consensus on how to approach the task. There are conspiracy theories suggesting it is all a hoax. And you might have to pay a fee to see it. 

But unlike the Decalogue Stone, your credit score may have a dramatic impact on your life. It is therefore important to take steps to protect and build up your credit score during and after your divorce. As someone with an MBA and business experience, as well as a law degree, Attorney Bob Matteucci is well-suited to assist you with this task. 

What is a Credit Score? And Why is it Important? 

Your credit score is one of the biggest factors lenders consider when deciding whether to loan you money. 

The score itself is a number between 300 and 850. The higher it is, the easier it is to get a loan, get a credit card with good terms, or otherwise access credit because lenders use your credit score to judge your credit worthiness.

Your credit score is calculated by considering:

  • The number of credit accounts you have, and how long you have had them.
  • The types of accounts you have (bank accounts, credit cards, car loans, mortgages, etc.)
  • The amount of money you owe compared to your credit limits — this is known as credit utilization.
  • Whether you have applied for credit recently (Creditors want to know if you are going on a spending spree).
  • Your repayment history.

However, it is a bit unclear how these factors become a credit score because many everyday activities can impact your scores in ways that are counterintuitive. For example, paying off a loan — which most people would consider a good thing — can make your credit score drop because there is no longer evidence of you making regular payments. 

Does Getting Divorced Impact Your Credit Score?

In theory, a divorce should have no impact on your credit score because your marital status is not part of your score. However, many people in the Albuquerque area discover that their credit score dips following their divorce. There’s a few reasons for this:

  • Most people have to set up new financial accounts post-divorce. Opening new accounts can drop your credit score.
  • Closing joint accounts can also cause a credit score to drop.
  • Your method or pattern of paying bills may change as you and your former partner split up this responsibility and/or set up new accounts. 
  • Setting up a new home may mean taking out a mortgage, and/or taking a large chunk out of savings to make a down payment or pay a security deposit on a rental. This impacts your credit utilization. 
  • Spending the money required to move, furnish a new home, and purchase other necessities often gets flagged as unusual spending — because it is!

Depending on what your credit score is to start with, the drop these actions cause can make it difficult to secure credit on good terms. 

5 Tips for Protecting Your Credit Score During and After a Divorce 

Your ability to access credit may not be the first thing you think of when you imagine your post-divorce life. But managing your finances is a necessary part of securing your future. 

Below are five steps you can take to help protect your credit score and rebuild your financial reputation post-divorce:

  • Know where you stand now. Request a copy of your credit report from all three major credit bureaus (Equifax, Experian, and TransUnion). Review these reports for accuracy and report any errors.
    • Periodically check these reports going forward to monitor your score and ensure the accuracy of the information these companies have about you. There are credit monitoring services that will do this for you, but if you choose to go this route, make sure you are signing up with a trustworthy company, and that you are sure you know exactly what services you are paying for. 
  • Sever the financial ties to your former spouse. 
    • Open new credit card and bank accounts in your name only. Start establishing your own credit history independent of your spouse.
    • Close any former joint accounts.
    • Remove your former partner from all your accounts, and make sure they do the same. This includes accounts like Amazon, where multiple people are authorized to make purchases. 
  • Freeze your credit. Once you have set up new accounts, you may want to consider contacting the three major credit bureaus and asking them to freeze your credit reports. A credit report freeze blocks anyone who doesn’t currently have access from pulling your credit report to check your credit score. This can prevent identity thieves — including former spouses — from setting up new accounts in your name because most lenders will run a credit check before extending someone credit.
  • Divide up your debts. Make sure your divorce agreement fairly divides the debt you held as a couple, and explicitly spells out who is responsible for what going forward. After your divorce is finalized, take all the steps necessary to put the agreement into action. 
  • Build your credit history. The more time that passes after your divorce, the more your credit score will reflect your personal habits.
    • Consider putting as many bills as possible on auto-pay so you do not miss any payments. 
    • Pay attention to your credit utilization. 
    • Watch out for fraudulent activity. 

These tips should be easier to follow than the inscription on the Mystery Stone, but if you need assistance, or have questions about how getting divorced will impact your finances, Attorney Bob Matteucci is here to help. Please contact him today to schedule an initial consultation.

About the Author
Bob Matteucci is a board certified family law specialist, with a statewide practice in the area of divorce and family law.