Most people understand the importance of good credit in starting a new, independent life after a divorce. Unfortunately, many people find that their credit is damaged due to circumstances that occurred during the marriage. In addition to repairing damaged credit and building good credit (topics for future articles), cleaning up your accounts is a place to start.
As part of the divorce, you should be proactive in removing your spouse from your credit report. This “clean-up” can take many possible forms.
You may see that there are accounts that were opened during (or before) your marriage that you no longer need. It is a good idea to keep your open lines of credit to a small number. Closing those inactive accounts reduces your chance of someone fraudulently using your credit and increases your score. Conversely, having too few lines of credit open to you can lead to an adverse score. Leave at least 1 or 2 accounts open with a zero balance.
For joint accounts with your ex-spouse, you will want to simply close those accounts. When you attempt to remove an owner you usually have to re-apply in your own name anyway, and receive a new individual account number. If the account balance is zero, simply send a letter requesting that the account be closed. If the balance is not zero, move the balance to another card first.
Accounts that you own alone may have your ex-spouse listed as an authorized user. This exposes you to possible liability from charges he/she may make after your divorce. For each account you wish to keep open that has an ex-spouse listed as an authorized user, send a letter requesting that (s) be removed as an authorized user.
Your credit report will also show accounts on which you are an authorized user, even if you are not an owner. You do not want to be an authorized user on your ex-spouse’s accounts, for liability reasons. Send a letter requesting that you be removed as an authorized user.
Once you’ve made these requests, give 45 – 60 days for lenders to complete your requests and report the new statuses to the credit agencies. Then check your credit report again. It may be inconvenient to follow up, but it’s important to protect your credit rating, especially during or after a divorce.