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Resolving marital debt and credit in divorce

The credit you've worked so hard to build teeters precariously when you are in the middle of a divorce. If you are like many divorcing couples and simply choose to live apart without a formalized separation agreement, you are still on the hood for debt racked up by the other spouse. 

That kind of sabotage couldn't come at a worse time, when you're trying to establish your own financial identity and build your own credit history. In order to come out on the other side of your divorce with a good credit score, you'll need to be diligent and take specific steps.

Take inventory of your debts and credit lines

If you have been married for a while, chances are you've had a few credit lines open, either joint or separate, or both. Since Texas is a community property state, any lines of credit you opened during your marriage are jointly owned, even if there's only one of your names on the account. Getting these accounts paid off quickly will help your credit score from facing a huge hit.

Separate all shared accounts

If at all possible, try to pay off joint accounts before you close them. If you're unable to do this, then you can try to turn a joint account into a separate account, though this is actually more difficult than it may seem. The only way you can remove yourself or your spouse is to go through the lender, and this can be a tedious process. Attorney Allison Maxim, a family law attorney from Minnesota says, "The sooner you close these accounts, the easier it will be for you to protect yourself from falling into deeper debt." So the longer you have a joint account, the longer you and your spouse will be financially linked.

Remove your spouse as an authorized user (and vice versa)

Similarly, if your spouse is an authorized user on a credit account, it's important to remove them promptly. If your spouse is an authorized user, it means they can make purchases on the card, but they aren't responsible for paying any of the debts, which can harm your credit score.

Removing yourself as an authorized user is also important, because you will still be included in the credit report, and ultimately, your score will be affected.

Begin building your own credit history and score

The sooner you open credit and bank accounts in only your name, the sooner you can start building your individual credit history and score.

Creating a new life for yourself as a newly single person can seem daunting and uncertain, especially when it comes to finances and your credit. Taking these steps will help you get off on the right foot.

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