4 Ways to Protect Your Credit and Finances During a Divorce

By Michelle Lambright Black
Published on: 08/09/2022

Divorce can be an unpleasant experience for some. Not only can there be intense emotions to navigate when you decide to dissolve a relationship, if you’re not careful, you could face financial and credit-related challenges as well.

With that being said, there are actions you can take that may help when you and a spouse decide to part ways. Below are four expert tips to protect your credit and finances during a divorce.

1. Prepare an individual budget

If you’re used to sharing financial responsibilities with a spouse, learning to manage income and expenses alone is likely to be an adjustment. For that reason, Leslie H. Tayne, Esq., Financial Attorney and Managing Director of Tayne Law Group, P.C., recommends to start preparing a budget as soon as possible when you are planning to separate from a spouse.[1]

“Figure out what you can afford when you live on your own and what your expenses will be,” says Tayne. Once you figure out the answers to these basic questions, you’ll have the building blocks to help shape your new, independent budget for the next stage of your life.

Once you have your budget in place, it’s important to open an individual bank account if you don’t already have one. Tayne says you want to learn to manage your money from the earliest part of the separation process possible.

2. Build your own credit in advance, if you can

Having good credit matters. This is especially true if you’re about to make a major life transition like a divorce. Good credit can make it easier to qualify for the things you need (like financing, housing, and insurance) and to get those things at a better price.

In a divorce there are many scenarios where your life may be changing in a way that causes your credit to come into play. For example, you might need to have good credit to:

  • Qualify for a new mortgage or apartment lease
  • Purchase or lease a vehicle in your own name
  • Take out an affordable auto insurance policy independent from your former partner
  • Open a new mobile phone or utility account without a deposit requirement

In any of these scenarios, a lender or insurance company might want to review your credit to assess the risk of doing business with you. And good credit could possibly save you money or help you qualify.

As you can see, there’s a good chance you’ll need good credit soon after you decide to separate from your spouse, long before the divorce is finalized. So, it’s important to build good credit as far in advance as you can.

If you don’t already have credit accounts established in your own name (like credit cards or credit builder accounts), you might want to consider opening some. Most of all, be sure to pay any credit obligations you do open on time every single month.

3. Make a plan for joint debts

Paying off joint debt is another action that could make your post-divorce financial life much easier to manage. Tayne says eliminating joint debts prior to the finalization of a divorce can make your settlement negotiations easier and may allow for a cleaner break as well.

“If you cannot pay off those debts or convert joint accounts to individual accounts during the divorce, monitor the accounts you're responsible for,” Tayne says. You might want to consider making the payments on debts yourself, especially if you find out that your ex is making late payments. Late payments can stay on your credit report for up to seven years according to the Fair Credit Reporting Act (FCRA).[2]

Tayne says mortgage debt is typically assigned to the spouse making more money than the other spouse, or it might go to the spouse who gets full custody of the children. “In those cases, one party will be required to buy out the other’s equity in the home.”

"If you live in a community property state,” says Tayne, “both spouses are held responsible for debts incurred during the marriage, regardless of the individual that agreed to the debt. If you live in one of these states, property acquired by either spouse during the marriage becomes common property—even if it was acquired in a single person's name.” Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.[3]

It’s important to note, even in community property states, not all assets are considered community property. Exceptions might include:

  • Property protected by a prenuptial agreement, which is created before the marriage and indicates what will happen to the assets upon divorce (overriding community property laws)
  • Property received by one spouse through inheritance, a will or trust fund
  • Property acquired before the marriage
  • Property gifted to one of the spouses
  • Property acquired when the spouses are legally separated and not living together
  • Debts, like student loans, acquired before marriage

Be sure to consult an attorney for specifics in your state.

4. Keep an eye on your credit reports and other accounts

It’s always wise to review your credit reports often from Equifax, TransUnion, and Experian. But during a divorce there are several reasons why you might want to keep closer tabs on your credit reports than usual.

First, you’ll want to make sure that your credit is in the best shape possible in case you plan to apply for new housing, financing, or services in your name. And unfortunately, it’s not unheard of for an ex to continue to use joint accounts after separation or to commit identity theft and open new joint accounts without their ex spouse’s permission. Routine credit checks can help you detect any such issues right away so that you can take action if they happen to you.

In addition to your credit reports, Tayne says, “Be aware of permissions given on previous accounts that you might want to revoke and monitor all accounts in your name or with your name on them.”

Finally, if you’re worried that your spouse might try to open accounts without your permission, consider placing a freeze on your credit reports. Credit freezes are free of charge, and they should prevent anyone—ex husbands and wives included—from opening any loans or credit cards in your name without your knowledge or permission.

The good news is that checking your three credit reports is free and easy. The FCRA gives you the right to access free copies of your credit reports once every 12 months from AnnualCreditReport.com.[4] In response to the COVID-19 pandemic, the credit reporting agencies are voluntarily giving consumers weekly credit report access for the time being as well.


  1. Leslie H. Tayne. www.taynelaw.com
  2. Federal Trade Commission. “Consumer Reports: What Information Furnishers Need to Know.” https://www.ftc.gov/business-guidance/resources/consumer-reports-what-information-furnishers-need-know
  3. Department of the Treasury Internal Revenue Service. “Community Property.” https://www.irs.gov/pub/irs-pdf/p555.pdf
  4. AnnualCreditReport.com. “The Only Source for Your Free Credit Reports. Authorized by Federal Law.” https://www.annualcreditreport.com/index.action

About the Author

Michelle Lambright Black is a nationally recognized credit expert with two decades of experience. She is the founder of CreditWriter.com, an online credit education resource and community that helps busy moms learn how to build good credit and a strong financial plan that they can leverage to their advantage. Michelle's work has been published thousands of times by FICO, Experian, Forbes, Bankrate, MarketWatch, Parents, U.S. News & World Report, and many other outlets. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).

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Written on August 9, 2022
Self is a venture-backed startup that helps people build credit and savings.

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