In case your money, assets, debt and accounts are deeply intertwined along with your spouse’s, you would possibly want to think about a credit freeze while the divorce proceedings are happening.
Also called a security freeze, this fraud-prevention measure limits access to your credit file, stopping any recent accounts from being opened in your name. If you happen to think your spouse might open accounts in your name or rack up debt on shared accounts, a freeze could be a approach to protect yourself.
Why freezing your credit can protect you in a divorce
Credit freezes restrict access to your credit report. While your existing creditors will give you the option to view your credit report, recent applications for credit won’t be processed as lenders won’t give you the option to access your credit history.
Keep in mind that under certain circumstances, government agencies may give you the option to access your report if there’s a subpoena or administrative order, say for child support. Others that can still have access to your report include landlords and property managers who use credit checks during tenant screenings, insurance firms that check credit to set premiums, and pre-employment background investigators (but only along with your signed consent.).
Should you might want to apply for brand spanking new credit accounts at any point, you may at all times lift the credit freeze temporarily (also often known as unfreezing or thawing your credit). Also, note you could check your credit report and the status of your credit freeze without spending a dime at any time.
The right way to freeze your credit
Putting a credit freeze in place is easy and completely free. All you’ve gotten to do is contact each of the three credit reporting agencies — Experian, Equifax and TransUnion — online or over the phone to request the safety freeze.
You’ll have to offer some personal information, reminiscent of your name, Social Security number, date of birth and call information. Be sure that to get in contact with all three credit bureaus, since corporations use different bureaus to access your credit. If you happen to only place a freeze with one or two of the credit reporting agencies, you’re leaving yourself open to a creditor requesting a credit report from the bureau you didn’t place a freeze with.
Credit freezes often go into effect immediately, but TransUnion recommends checking inside an hour of your request. If you might want to thaw your credit temporarily to use for a loan or bank card, you may request that the freeze be lifted during a particular period — otherwise, they’re indefinite until you request they be removed.
Other precautions to take
Except for a credit freeze, there are other measures you may take to guard your credit during a divorce process.
Check your credit report
Pulling your credit report gives you a transparent picture of your debt and your credit history.
When reading your credit report, note that it can show all of your existing credit-related accounts (including any negative or closed ones), any hard or soft inquiries for the last two years, and in fact, your personal information. Search for any errors or inaccuracies, or unfamiliar charges.
You may get free reports every week at AnnualCreditReport.com, but note these won’t show your credit rating.
Remove your spouse as a certified user
Authorized users could make purchases with a bank card without being legally accountable for the debt. Be sure that to remove your future ex-spouse from any accounts in your name if there is a risk they might rack up charges on the account and never repay them.
Separate your accounts
It’s common for spouses to have joint savings and checking accounts, or joint bank cards. Chances are you’ll even have assets in investment or retirement accounts you might want to separate as a part of your divorce process.
If you happen to live in a state with community property laws — Arizona, California, Idaho, Louisiana, Nevada, Recent Mexico, Texas, Washington and Wisconsin — each spouse has a share of the marital assets. That may include real estate, property, bank and retirement accounts, pensions and securities. Community property laws establish, then, that any debt acquired through the marriage have to be shared equally, no matter whose name it’s under.
Consider a refinance
Joint debt involved in assets, reminiscent of a house or automobile, may must be refinanced within the name of the spouse who will keep the asset. Refinancing will separate the debt so it isn’t owned by each spouses.
Should You Freeze Your Credit During A Divorce FAQs
Does divorce affect your credit rating?
Your marital status doesn’t directly affect your credit rating, since credit bureaus have individual reports for everybody. Nevertheless, divorcing could have other financial consequences that may affect your credit. You might have to shut a joint bank card, as an example, or tackle more debt.
Can I open a bank card during a divorce?
If you happen to haven’t arrange a credit freeze, you may open a recent bank card when you’re divorcing. It would even be a savvy money move if you might want to access after closing a joint account.
How do I freeze my credit on all three bureaus?
To freeze your credit with all three credit bureaus, you might want to contact each and make a proper request, which you may do over the phone or online.