How to Protect and Rebuild Credit After Divorce

Do one thing: When going through a divorce, keep a close eye on your credit reports, regularly downloading the free documents to ensure accuracy. You can find them on SavvyMoney through online or mobile banking, or the annual credit report website.

Divorce and Financial Strain  

While the rate of divorce in the United States is lower than it was a few decades ago, the financial impacts of ending a marriage in the U.S. can linger for years, federal data shows.

In many cases, divorced Americans have lower household incomes and less wealth than married adults, according to The Pew Research Center. Pew mined federal data to uncover these financial facts:

• Working-age divorced adults tend to have lower median household incomes of $84,900. Married adults, including those in a first marriage, have a median household income of $118,600.

• Those who are working-age and divorced also have less median household wealth – reported at $98,700 – than couples in a first marriage, who have a median household wealth of $326,900. Those who are remarried report having a slightly higher median household net worth of $329,100. 

Divorce Can Mean More Debt

Those involved in divorces where credit card debt was an issue often end up in even more challenging financial situations after a breakup. A survey of more than 500 U.S. adults conducted in 2025 found that:

• 20% of those who ended a marriage because of financial issues took on up to $15,000 in debt
• 37% saw a drop in their credit scores of more than 50 points

What Happens to Joint Accounts

During a divorce, separating finances can be as challenging as dividing property. It’s important to know that joint bank and credit accounts remain the responsibility of both parties until they are closed, paid off, or refinanced, even after a divorce is finalized.

Plus, lenders aren’t bound by divorce orders, so any late or missed payments or rising balances on joint accounts can harm the credit of both spouses if an account is in both names. It’s a good idea to:

1. Identify all joint accounts early in the process
2. Develop a plan to separate them, rather than leaving shared financial obligations in place.

“Communicate clearly with your spouse about who will pay which bills to ensure no payments are missed,” says Susan Plisch, CFP, a certified divorce financial analyst with Resilient Divorce Solutions in Urbana, Illinois. Having an agreement in writing is even better.

How to Protect Your Credit During Separation

Couples who are separating should also take immediate action to safeguard their credit. Plisch notes that a good first step is to do the following:

Get Individual Accounts

Make sure that each person has a credit card and bank account in their name only.

• This allows for independent bill payment.
• Begins or strengthens individual credit history, which may have been limited during years of joint finances.

“If one spouse has a history of excessive spending or gambling, additional precautions may be needed,” she says, “including closing joint accounts, removing one’s name from shared credit or placing a credit freeze to prevent new debt from being opened without consent.”

Pause Some Spending

Plisch recommends cutting back on discretionary spending:

• Subscriptions
• Dining out
• Travel

That’s because saving cash can potentially help cover divorce-related costs such as legal fees, mediation, and moving expenses, and better prepare people for a leaner post-divorce budget.

The Correct Order of Operations

Resolving debt in the right order can prevent long-term problems.

• Dividing Assets – Plisch and others advise that debt and property should remain linked.
  • Vehicle. For example, if one spouse receives a vehicle, that person should also be responsible for the associated loan.
  • Vehicle Loan. Leaving a loan in another spouse’s name — or keeping it joint — can lead to credit damage if payments are late.
• Refinancing – This is often required to move loans into the name of the person who receives the asset. Without refinancing, missed payments by one person can continue to affect the other’s credit after the marriage ends.
• Eliminating Debt – For debt such as credit cards, a best practice is to pay off balances before finalizing the divorce.
  • Proceeds from the sale of a home or withdrawals from investment accounts are often used for this purpose.
  • Eliminating joint credit card debt allows both parties to start fresh and manage households on their individual incomes.
• Avoid New Debt Together – Joon Um, CFP, with Secure Tax & Accounting, Inc., in Beverly Hills, California, advises that divorcing couples should not take on new joint debt. “That’s usually when mistakes happen,” he says. “If possible, separating or refinancing accounts before the divorce is finalized makes things a lot cleaner.”

Rebuilding Individual Credit

After years of shared credit, rebuilding an individual credit profile can take time, but it is achievable with consistent habits, says Sarah Avila, CFP, a certified divorce financial analyst with VLP Financial Advisors in Vienna, Virginia. Consider these steps to boost your individual credit:

• Open a new credit card account. 
• Pay it off each month to build a positive credit history.
• Keep older accounts open if they are in your name only and have a good credit history.

With reporting by Casandra Andrews