Getting divorced can come with plenty of heartache, paperwork, and even financial burdens. But one of those struggles does not include a dip in your credit score just because you signed divorce papers.
“The act of getting a divorce does not have a direct impact on your credit,” Bruce McClary, vice president of communications for the National Foundation for Credit Counseling, said in an email.
But that doesn’t mean getting divorced can’t affect your credit in some way.
“The more shared debt there is in a marriage, the greater the potential for some problems to arise if the relationship ends in a divorce,” McClary said.
So, the legal act of getting a divorce may not directly affect your credit, but what comes after may cause your credit to take a hit, depending on how your shared finances are dealt with.
When you examine the financial lives of those who divorce, it’s common to see one person more prepared for the future, than the other. The lack of preparation is evident in both retirement accounts and daily living. Both people need to know how to budget, pay bills, save for retirement and make all sorts of financial decisions. Those four skills are priceless. If both people in a marriage develop those skills, then the financial risks and impact of a relationship transition are mitigated. Beyond divorce, or shall I say before divorce, when both individuals possess high-level financial skills, everyone wins. Your marriage will actually benefit from your joint efforts, not suffer. via Figuring divorce into your financial plans fatalistic but smart
But not everyone is proficient at these skills, and as a result, their finances and even their credit can suffer post divorce. There are however things that can be done even following your divorce to ensure that you keep your financial house in order.
To keep all these details straight, follow this checklist of financial tasks that need prompt attention post-divorce:
1. Obtain a copy of your certified divorce decree, and make extra copies so that you’re able to provide them promptly when needed.
2. Close joint credit accounts.
3. Remove your former spouse’s name, and/or change your name/address, on all remaining accounts, including:
· Bank, brokerage and investment accounts
· Credit cards
· Driver’s license, automobile title, registration and insurance policies
· Employer’s records
· IRS records
· Life, health, homeowner’s and disability insurance policies
· Post office (Remember to have your mail forwarded, too.)
· Professional licenses
· Social security card
· Title to real property
· Utility bills
4. Research your health insurance options and apply for COBRA, if necessary.
5. If your divorce decree requires a Qualified Domestic Relations Order (QDRO):
Provide the QDRO to appropriate banks, brokerages, pension plan advisor, 401k administrators, etc. (Even better, have this step completed before your divorce is finalized!), a quitclaim or warranty deed: Make certain the appropriate documents are executed and recorded. Also, the transfer of title to property (automobiles, boats, etc.): Sign and deliver the necessary documents to complete the transfer.
6. Open a new bank account. Consider establishing direct deposit or income withholding for child support, spousal support and/or alimony payments.
7. Open a new credit card account and request a copy of your credit report.
8. Disinherit your former spouse. Write and execute a new will, trusts, medical directives and/or living wills and powers of attorney. Don’t forget to change the beneficiaries on your life insurance, 401k, pension and IRA accounts.
9. Establish a system to keep track of all child support made/received, alimony payments made/received, medical expenses, etc.