How Divorce Affects Your Credit Score

How divorce affects your credit score is a common concern for many people who have a lot of joint assets. In this article we discuss what you will want to pay attention to if you are going through this challenging time.

Dissolving a marriage is challenging in many ways. If you find yourself in this tough situation, you may be wondering what sort of challenges and hurdles you will face financially.  As far as your credit score is concerned, the good news is that a divorce does not impact your credit score directly. There may, however, be indirect effects that divorce proceedings can have on your credit score.

Financial Obligations with Joint Accounts

It is common for couples to have joint accounts while married such as a credit card or car loan. Whenever you initially open a joint account with payback obligations, they can be added to both of your credit reports. Getting divorced does not dissolve those joint account obligations; those lenders still require that you pay back the money that you both borrowed, regardless of your marital status.

If you and your ex have agreements in place regarding who is going to pay for what, that is great, if it all goes according to plan. If, for example, a judge orders your ex to pay a joint credit card obligation but he or she fails to do so, your credit score could suffer just as theirs could. In short, your ex’s debt repayment behavior is especially important and can have an impact on your credit score.

Be Prepared and Protect Your Credit

Here are some things to consider so you are prepared and protect your credit score.

Research

Research areas such as common money mistakes in divorce so that you are ahead of the curve and feel prepared to keep taking those steps forward.

Pay Attention to Your Accounts

Double check that all your individual accounts are, in fact, only in your name. Along with this, make sure that those individual accounts do not have your departing spouse listed as an authorized user. If they are an authorized user on any of your individual accounts, you will want to have their name removed.

Monitor Your Credit

Monitor your credit often to make sure you are aware of your open accounts and any activity that is occurring within those accounts. You can use a tool like Credit Karma to easily keep track of all your activity related to your credit scores.

Communicate with Your Ex

Try to maintain a positive and constructive relationship with your ex. It is easy for frustration to set in but try to remain calm and collected. Avoiding vindictive behaviors is key so that one partner does not rack up more debt when your name is also on the account. Create a plan and make sure that you are both on the same page.

Manage Spending

Be prepared for the what-ifs that could come up along the way. Continue to make, at least, the minimum payment amounts when you are still sorting things out with your ex. Try to hold off on any large purchases until things are settled and finalized.

Seek Help From Professionals

Most importantly, seek out professionals in real estate, mortgage, Family Law, etc. More specifically seek out a professional with RCS-D™ designation. They are trained, educated, and experienced when dealing with simple to complex divorce situations. If, at any point, you or your departing spouse are confused or need guidance, there are people here to help you navigate through the stages of your divorce.