My husband and I are divorcing. We have two cards together, and I have one of my own — it's a Nordstrom card that I had even before we were married. None of our cards has a balance. Should we close the cards we have together and get new ones? Or can we split the two and each get one — but with the other person's name taken off — so as to preserve our high credit scores. Thanks for your advice. – Bethany
I adore fresh beginnings. Never-been-dined-on dishes, an updated haircut, a change of career … and yes, new credit cards. All can make perfect sense after a breakup.
Then again, even if you remained married, I'd suggest that you get a major credit card in your name only. Who said love means having to be financially fused to the other person? Not me. Even a little money and credit independence is a wise precautionary measure.
Now that you are splitting, though, it's good to take inventory of the credit you've got and can keep. While you do not own a personal credit card that you can use anywhere, you do have a retail account. That's fine for the moment. Keep the card active; you've got a significant history with it and that benefits your credit rating.
Regarding what to do about the other credit cards, you may have trouble converting those from joint accounts to individual accounts. The reason is that the companies granted those credit lines based on your household income as well as your individual credit ratings. That makes the two of you equal partners in the arrangement. Dropping one of you as owner would be changing the terms of the original contract.
Still, it doesn't hurt to try. Call the credit card companies and ask if they will permit one of you to be removed from ownership and liability. What they will allow is a matter of policy, not law, and each issuer has different rules. If you can keep one of the cards as an individual owner, wonderful. It will be yours and you can use it without your ex having access or legal responsibility.
However, if your issuers say they can't comply with your request, but you can close the cards and open new, individual accounts, consider it. Because they know how well you've been borrowing and repaying in the past, they almost certainly would like to keep you as a customer. Maybe they can even offer you a better deal, such as a credit card with an even lower interest rate or one with a preferred rewards program.
Do not narrow your search to just the issuers you've been dealing with, however. There are plenty of others, so check them out before deciding. With a score that's at least in the mid-700s and a steady income, you should qualify for cards in the “excellent credit” category. If you don't know your most recent credit scores, consider pulling your FICO score (the score most commonly used by lenders). You can get it for about $20 at myFico.com. Then, apply for the card that appears best for you.
Finally, don't worry about what closing an old card and opening another will do to your credit. Yes, it will have an effect, but it won't be a dreadful dip. Paying on time and keeping the debt well below the charging limit are by far the two most important factors for a FICO score, and it sounds like you've got those areas well covered. If do you acquire a different card, just use it regularly and responsibly for a year. That way you'll satisfy the next most weighty scoring factor — length of credit history.
Now, go splurge on some new stemware and toast to the future!
Got a question for Erica? Send her an email.