Divorce & Credit Scores

Divorce is simplified when husband and wife don't have any joint accounts and have maintained their finances separately. However, when they have joint credit cards, loans and other joint responsibilities, divorce can be difficult and often damaging to credit histories. Financial obligations should be taken seriously and responsibly by both spouses.

Obtain Credit Report

The first step is to get a good picture of the overall financial situation by obtaining a copy of the credit report from all three credit bureaus: Experian, Trans Union and Equifax (see Resources). Laws vary by state, but in community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) both spouses will be at least partially responsible for debts incurred during the marriage even if the credit or loan was only in one spouse's name.

Protect Credit

If possible, spouses should divide the debts between themselves and agree to pay them. Ideally, each spouse will take an individual loan to pay off debt. Spouses should contact the creditors to convert joint accounts to individual ones. Creditors may ask each spouse to re-apply separately. Students and homemakers may have difficulties qualifying due to lack of financial stability or lack of credit history. In this case, both spouses will be responsible for repaying the debt. They should also close all joint accounts to prevent accruing additional debt.

Establish Credit

Paying bills and credit obligations on time establishes good credit history. Opening a credit card with a small line of credit and making regular payments shows that the borrower can handle credit responsibly. If opening a credit card without a co-signer is not possible, ask a friend or a relative with a good credit history to co-sign. After six months of regular payments, the financial institution may consider removing the co-signer and converting to individual account.

Get Help if Necessary

In some cases, spouses may have difficulties paying their individual financial obligations after the divorce. During marriage spouses rely on each other's income to pay debt and bills. After the divorce, each has his own income to make ends meet. Credit counseling agencies provide information and support for the individuals who have financial difficulties.