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You expect the upheaval of a divorce to challenge you emotionally. But bear in mind that it can also jeopardize your financial well-being. One way to protect your finances during a divorce is to freeze your credit.
A credit freeze, also known as a security freeze, is a fraud-prevention measure that restricts access to your credit file, preventing new credit applications. Under federal law, credit bureaus must allow you to freeze your credit file and cannot charge you for placing or lifting the freeze.
Because your spouse is likely to know or have access to your personal information, such as your Social Security number, they could misuse it to get credit in your name. This could be because they’re cash-strapped—or because they’re deliberately trying to harm your credit.
“Even if you don’t think your spouse would do something like that, it’s a good idea to freeze your credit just in case,” says Leslie Tayne, a Melville, New York lawyer who specializes in debt relief and settlement. “People often do surprising and hurtful things when going through a divorce, so it’s important to protect yourself.”
The downside to a credit freeze is that it also halts legitimate credit checks. So, if you need access to your credit report to apply for loans, credit cards, jobs or housing, you’ll have to temporarily lift the credit freeze, which is known as “thawing” your credit.
How Freezing Credit Can Protect You in a Divorce
Freezing your credit report can guard your finances and credit score in two major ways.
- A freeze will prevent unauthorized credit access. Freezing your credit stops anyone, including your spouse, from opening new credit accounts without your explicit permission. This minimizes the risk of your soon-to-be-ex accumulating undisclosed debt during the divorce.
- A freeze will safeguard your credit score. Restricting access to your credit reports lowers the risk of anyone committing financial fraud using your identity. If you have not frozen your credit and your spouse takes out credit cards or loans in your name, their actions could jeopardize your credit score and your access to credit in the future.
New York City family law and divorce attorney Evan Schein says that freezing your credit is critical in protecting your credit score.
“It’s an important piece of the divorce financial puzzle to avoid entering post-divorce life with a low credit score,” Schein says. “A low credit score will impact [your] ability to purchase a home, obtain a mortgage or qualify for credit cards.”
How To Freeze Your Credit
Freezing your credit is relatively easy. You simply need to contact each of the three credit bureaus—Equifax, Experian and TransUnion—and make the request. It’s important to have all three bureaus freeze your credit, as different companies use different bureaus to gain access to your credit report.
All of the credit bureaus allow you to place the freeze online or over the phone. Credit freezes usually go into effect immediately. “Adding or removing a credit freeze often happens in real time, but to be on the safe side, allow up to one hour for it to go into effect,” according to TransUnion’s website.
Similarly, unfreezing your credit happens immediately after the request. Again, however, credit bureaus recommend that you wait an hour after initiating the thaw before you, say, apply for a new credit card.
Credit freezes last until you initiate a temporary thaw or remove them entirely.
Divorcing Couples and Credit Monitoring
In addition to freezing their credit, individuals going through a divorce should also monitor their credit, says Southern California divorce attorney Holly J. Moore.
“Consider credit monitoring to stay on top of any suspicious activity during this transition,” Moore says.
Credit monitoring services will watch your credit files and personal information to thwart attempts at identity theft. Features will vary by provider.
Aspects that credit monitoring services commonly track include:
- Hard inquiries: credit applications made in your name
- New accounts: detection of accounts opened under your name
- Balances and payments: tracking of credit card balances and payments
- Changes to personal information: updates to the name or address in your credit file
- Public records: identification of events like bankruptcies in your credit history
- Dark web exposure: watching for leaks of your personal information—such as Social Security number, email addresses and passwords—to prevent unauthorized access
Although some of the best credit monitoring services can cost up to $35 per month, there are several respected companies, including Experian, that will provide the service free of charge.
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