EP 82: 3 Ways to Protect Your Credit in Divorce…and Afterwards

Episode 82 of the Divorce and Your Money Show discusses how to protect your credit during divorce.

A common concern during a divorce proceeding is protecting your credit report and credit score.

What is a credit report? It is a history of all credit accounts and loan payments that you have had throughout your life. Your credit report drives your credit score, which is on a scale of 300 to 800.  The higher your credit score, the better loan structures and payments you can receive.  Credit Karma and FreeCreditScore.com are great resources for checking your credit score.

During a divorce, you need to protect your credit score. That way, your spouse cannot sabotage your financial future. Here are the steps for protecting it:

1) Monitor your joint accounts (especially joint credit cards).

Remember, if your name is on the debt, it is your responsibility.  If you want even more secure protection, close or freeze joint accounts.  A frozen account requires both individuals to sign and authorize transactions.  You can also ask the state for an Automatic Temporary Restraining Order.  Listen to Episode 39 for more details on restraining orders, but they are an extra layer of protections from the state, which you can send to your financial institutions to ensure freezes on joint accounts.

2) Protect your online assets.

Be sure to change your email addresses and passwords.  Google Authenticator will not let others login without a second source of identification (such as a secret code to a mobile phone).  Consider a password service (such LastPass or 1Password), which creates highly secure passwords that are protected and encrypted.

3) Engage the services of an identity theft protection service (such as Lifelock or IdentityForce).

I personally use IdentityForce, but any service should work.  These services continually monitor, safeguard, and insure against unauthorized identity theft with real-time alerts.  Not only are they specialists, you also have protection and recourse if something is amiss.

Be vigilant in protecting your credit history, as it will drastically affect your financial future.

Key Learning Points

  • Your credit score from your credit report can drastically affect your life during and after a divorce—as you apply for mortgages, refinancing, credit cards, and auto loans.
  • The basics of credit monitoring
    • A credit report is a history of your past and current debts and loans.
    • A credit score affects your worthiness as a borrower, which can determine your loan rate.
    • Consistently monitor your joint accounts. You can even freeze them, or acquire a restraining order to enforce a freeze on your joint accounts.
  • Change your email address and passwords on all of your accounts and online assets.  To help you, utilize a service such as LastPass or 1Password.
  • Identity theft services are professional organizations that monitor, safeguard, and insure against identity theft and unusual activity in your accounts.
  • The above steps will ensure that your credit history and future will not be tarnished because of spousal activity during a divorce.

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