I want to visit a topic that I'm frequently questioned on by clients. With the record high divorce rates in Canada and the United States, one should ask themselves how will a divorce impact my credit report?
A divorce decree alone will have no impact on jointly held accounts that are a part of your credit report. For joint accounts, including credit cards, car loans, home mortgages and lines of credit, you and your ex-spouse continue to have joint liability. You are both responsible, and if one of you defaults, creditors will seek payment from the other.
Just because your divorce may be finalized and you think that "finally it's all over!" the reality is that if you were a co-signer on anything with your previous spouse then you are still liable for these debts. Failure on the part of either party to make payments on time and/or pay off these debts will result in your own personal credit being potentially ruined! Often this happens and you are not even aware of it!
In going through the divorce process, ensure that any joint liabilities are reconciled and resolved, that debts have been satisfied and you have been completely removed from any further potential liability and costs from your former spouse. Think very carefully about old credit cards that may have been put in both parties names many years ago and forgotten about that could crawl out of the woodwork at some future point and harm your credit.
Check your own personal credit and FICO/Beacon Score to avoid these surprises before it's too late. It's up to you to take responsibility and proactive action to protect your personal credit. You are the only one who can.
Warmly,
Mary Wozny
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