Ending a relationship is never easy, but it can be even worse if the financial behavior of your soon-to-be ex leaves you in a financial mess. When you’ve shared bank accounts, credit cards or household bills with another person, their financial behavior can affect your credit and your finances.
If your credit is negatively affected because of your ex’s behavior, the credit bureaus are unlikely to adjust it if your name is also on the accounts. Instead, your only recourse is to sue your ex for damages caused to your credit report, which costs more time and money. That’s why it’s best to take proactive steps to avoid that situation.
Even if you can’t save your relationship, you may be able to salvage your credit despite your ex’s behavior. Take action in these four areas to avoid letting your ex ruin your credit.
Refinance any joint property, such as cars or houses, only in the name of the spouse who will keep the asset. For example, if you are keeping the house, you need to have your ex’s name removed from the mortgage and the deed. If he or she got into financial trouble and their name was still on your home, you could have a lien or judgment against your home to cover your ex-spouse’s debts.
Similarly, if your ex is getting the car but doesn’t remove your name from the car loan, you will still be held legally responsible for the car payments if he or she stops paying. If you don’t want to refinance, consider selling the property. If you continue to own joint property with your ex and he or she stops paying bills, your credit and finances will be negatively affected.
Make sure your attorney asks the judge to require the refinance of any joint property in your divorce decree. If the spouse who is awarded the car or home cannot afford to refinance the loan in his or her name only, the judge can require the sale of the asset. In the meantime, work to make sure the bills continue to be paid on time.
If you and your ex have joint credit cards, remove your name from the accounts. That way, he or she cannot run up debt under your name.
You may also consider closing any joint credit card accounts and opening a new one in your name. Closing accounts may negatively affect your credit score in the short term because it will decrease your amount of available credit, and credit age. However, doing so will prevent your ex from making charges for which you cannot—or don’t want to—pay.
If you and your spouse use a joint bank account, open a new savings and checking account in your own name immediately. When you have your own account with your own money in it, there’s no longer a risk that your ex will empty the joint account and leave you penniless and unable to pay bills.
Also, if your spouse has any court-ordered judgment against them, money in a joint account can be used to pay the judgment. You can protect your own money by getting it out of the joint account.
In addition to opening your own bank accounts, close any joint accounts you have with your spouse. As long as your name is on the account, you can be held responsible if the account is overdrawn and required to pay any associated fees.
Make sure you continue to make on-time payments for any bills that have your name or personal information associated with them. If you’ve moved out of the home you shared with your ex but the utility bill there is in your name, make sure it’s paid on time every month—and work to get your name removed from the account. If you can’t pay the full amount due on a credit card, at least pay the minimum payment. Late payments will negatively affect your credit score.
It’s possible to go through a divorce or split and keep your credit intact, but it often takes careful planning. Keep track of your credit and any potential changes with a ScoreSense subscription. Click here to try a free, 7-day trial.