By Mike Stetzer
When filing for divorce, you and your spouse may need to figure out the issue of separating credit. Credit scores affect everything from home loan rates to car insurance cost.
Learn the impact a divorce can have on your credit score by speaking with a local divorce attorney.
Married couples have certain advantages with credit. When applying for loans or lines of credit, the couple can often choose between two credit scores to get the best rates possible. Building credit as a couple can have some disadvantages.
Shared accounts, where each spouse is joint account holder, affect both partners credit scores. If a spouse has handled credit carelessly on a joint account, the other spouse's credit score suffers as well.
When people do not keep credit histories independent of a spouse, there may be some unpleasant surprises after divorce.
After six months of inactivity, credit files go dormant, depending on the credit source. Agencies have no credit action to report and creditors see an empty credit history. It can be very difficult to qualify for loans, credit cards and other lines of credit.
You may be able to prevent a credit disaster by maintaining your credit autonomy during your marriage. Keeping an individual credit report can be as easy as keeping open some of your old credit accounts, making small purchases with them every few months and paying the bills in full.
Naming your spouse as a "joint account holder" on any of personal lines of credit can be a pretty big move in the credit world. Joint account holders are responsible for paying all debts associated with an account - no matter who incurred the debt.
During the divorce process, you and your spouse may consider freezing joint accounts to stop either person from having access to the accounts until divided. Couples may also opt to put all joint accounts into one Escrow account, where a bank officer monitors transactions.
A local divorce attorney will talk to you about all of your accounts, whether joint or independent, and advice you on the steps you can make to protect your finances.
If you and your spouse can work together, divorce laws in your state may allow you to negotiate the division of joint accounts.
Typically, you and your spouse will exchange case information statements and account statements. You will both work with divorce lawyers to negotiate a division that's fair and reasonable. If you and your spouse can't agree on who gets control of a joint account during the divorce, it will be up to the courts.
If you've already begun divorce process, you may want to think about rebuilding credit.
Learn how your debts and assets can affect property division by connecting with a local divorce lawyer. Connect today by calling 877-349-1310 or filling out a divorce case review form. Work on protecting your financial future with a divorce attorney near you.
The above synopsis of credit independence is by no means all-inclusive and is not intended to provide legal advice. These laws may have changed since our last update and there may be additional laws that apply in your situation. For the latest information on these divorce laws, please contact a local divorce lawyer in your area.