Protecting Your Credit During a Divorce: Essential Steps to Safeguard Your Financial Future

The end of a relationship, whether through divorce or separation, can be an emotionally charged and challenging time. Amidst the turmoil, it’s crucial to protect your financial well-being, particularly your credit score. At O1ne Mortgage, we understand the importance of maintaining a healthy credit profile, and we’re here to help you navigate this difficult period. Call us at 213-732-3074 for any mortgage service needs. Here are some essential steps to protect your credit from potential harm by an ex-partner.

Consider a Fraud Alert or Credit Freeze

If you suspect that your ex might misuse your personal information to apply for credit in your name, it’s essential to take preventive measures. Placing a fraud alert or credit freeze on your credit reports with the national credit bureaus (Experian, TransUnion, and Equifax) can help protect you from credit fraud.

A fraud alert requires lenders to verify your identity before processing any credit application in your name. By placing a fraud alert with one credit bureau, it automatically applies to all three. On the other hand, a credit freeze blocks new credit applications from being processed. You must contact each credit bureau separately to freeze your credit report. If you need to apply for a loan or other forms of credit, you will need to lift the freeze temporarily.

Seek Legal Guidance

Divorce or the dissolution of a domestic partnership is a legal process, and seeking the advice of an attorney is crucial. This is especially true when there are issues of child custody or extensive joint assets and debts. Even if your situation seems straightforward, a seasoned lawyer can help you anticipate potential issues and protect your interests.

Remove Your Ex as an Authorized User

If your ex is an authorized user on any of your credit card accounts, it’s important to remove them immediately. As the primary account holder, you are legally responsible for repaying all charges made on the account. Removing your ex as an authorized user will invalidate their card and prevent them from making further charges.

Change Account Numbers

If you retain any credit cards in your name, it’s wise to assume that your ex has access to the card numbers and CVV security codes. Requesting new cards with new numbers will prevent your ex from using them for unauthorized purchases. Additionally, if your ex had access to your checking account number, consider closing the account and opening a new one. Update your payment apps and any recipients of electronic payments to avoid missed payments and late fees.

Change Passwords and PINs

Couples often share passwords to online banking sites and other financial accounts. After a breakup, it’s essential to change all passwords and PINs to protect your accounts. This includes changing device passwords on your computers, tablets, and phones to prevent access to stored credentials.

Close Joint Accounts

Divorce cannot sever the contracts governing joint loans and credit accounts. As long as these accounts remain open, your ex might stop payments or max out balances. Work with your attorney to disentangle joint accounts as part of the division of marital assets. The more amicably this is accomplished, the better off all parties will be.

Credit Cards and Other Unsecured Debt

For joint credit cards or unsecured debts, you typically need to pay off the balance in full to close the account. One option is for both parties to take out individual loans or balance transfer credit cards to pay their respective shares of the outstanding balance.

Mortgages, Auto Loans, and Other Secured Debts

Removing a co-borrower from a secured debt, such as a car loan or mortgage, usually requires paying off the loan in full. This can be done by selling the asset, refinancing the loan, or arranging for one co-borrower to take over the loan without refinancing. Consult with your lawyer or financial advisor to explore your options.

Maintain Payments on Joint Debt

If you cannot extricate yourself from jointly held debt, it’s crucial to monitor payments to ensure they stay current. Even if the court makes your ex responsible for payments, any late or missed payments will appear on both credit reports. If your ex fails to make payments, consult your legal advisor about your options. It may be wise to bolster your emergency fund to cover a few months’ worth of joint payments.

Strive for Civility

While an amicable split is ideal, relationships often end with some degree of rancor. Do your best to avoid antagonizing your ex and keep communications open. Focus on practical and financial concerns to help keep matters businesslike and avoid spite and recrimination.

Monitor Your Credit

Along with identity thieves and fraudsters, an ex can be a threat to your credit. Automated credit monitoring can help you identify and address issues early. For example, Experian’s free credit monitoring alerts you to activity on your credit report, including new credit applications and missed payments.

The Bottom Line

Even the most amicable breakups can stir up anger and prompt vindictive behavior that can damage credit scores. By taking steps to separate your debts and monitoring your credit, you can minimize the risk. At O1ne Mortgage, we’re here to help you protect your financial future. Call us at 213-732-3074 for any mortgage service needs. Getting your free credit report and score from Experian can help you see where you stand and detect any attacks on your credit.

By following these steps, you can safeguard your credit and ensure a more secure financial future during and after a breakup. Remember, O1ne Mortgage is here to support you every step of the way.