How to create a separate credit identity after divorce

Establishing a separate credit identity after divorceDivorce can be a painful and stressful time all its own. Many couples are able to reach a level of amicable agreement on most things, but the two areas fought over the most are children and assets. The one thing couples need to be sure to have a strong hold on before, during and after their divorce is their credit identities.

On, financial analyst Elizabeth Cox cites the story of one woman who was shocked to have her mortgage application turned down because of a poor credit rating resulting from her ex-husband's poor financial dealings from when they were married. Unfortunately, this happens.

Here are a few tips on how to create and maintain a separate credit identity during and after your divorce.

Identify all joint accounts. The first thing to do is to obtain a copy of your credit report from each major credit bureau: Experian, TransUnion and Equifax. Go over them carefully and circle the sources of credit your spouse is authorized to use.

Close all joint accounts as soon as possible. If the source of credit has no balance, this should be relatively easy. If there is an amount owing, try paying it off or, at the very least, call the creditor and ask to have the account frozen. If it's a source of credit you'd still like open, see what you can do to get your name, or your ex's, removed and transferred to whichever one of you wants the account. According to, you should "Make sure to make at least the minimum payments on joint credit card bills while you are in the process of closing/freezing joint accounts. Even one late payment can affect your FICO score."

Make a plan. This doesn't just mean taking care of debt, it also means preparing for some sort of savings. Trust needs to be built, and the greatest way to do this (aside from paying bills on time) is to show you can sock some money away. There are many accounts now offered through ING and other banks, including tax-free, high interest accounts.

Get your own credit. Now is the time to start building your own credit. As we know, it takes time to establish ourselves in the eyes of creditors, so get on it now so you have a solid base to start from after your divorce.

Put a joint mortgage in the sole responsibility of the person making the payments. According to, the best options are to either "sell the marital home and pay off the mortgage (cleanest choice), or to refinance the mortgage in the sole name of the person responsible for paying it." It's highly advisable to do this before the divorce is final. Remember to make sure those mortgage payments are up-to-date, no matter what. You can always sue your ex for reimbursement for the payments, Cox points out, but you must avoid your credit rating being pulled down by their irresponsibility.

Get rid of any debt your ex co-signed for you. A lot of people don't realize this, but when a person co-signs a loan or credit card for you, the information goes on both individuals' credit reports. So if a payment is missed, it looks bad for everyone involved. Either get rid of that debt or get yourself removed from it.

Finally, make sure to notify everyone including creditors and government organizations of your name change if applicable. Following these steps will help get you on the right financial path for your post-divorce life.

Written by Lily Wolf.

Published August 7, 2009

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