Can Divorce Hurt My Credit Score?
Going through a divorce can affect you in many ways, from being mentally taxing to socially stressful, but the most tangible effect that a divorce can have on you is financial. Many couples who have gone through a divorce find themselves in financial straits when transitioning from a two-income household where both partners share in paying the bills to having to pay for every bill yourself. One question that is often asked is whether getting a divorce can affect your credit score. This article will discuss how a divorce could affect your credit score and some tips to lessen the impact a divorce can have on your financial standing.
How Can a Divorce Lower Your Credit Score?
The fact that you get married or the fact that you get a divorce does not have any effect on your credit score or your credit report. No element of your credit report indicates your marital status. A credit score reports on all credit accounts opened in your name at any time regardless of marital status.
Any new accounts that are opened during marriage, whether solely in your name or joint, will be on your credit report, and joint accounts are where some couples get into trouble. If your partner has access to a joint credit card and puts charges on it without your knowledge, you will still be responsible for it because your name is also on the account. Another example is if your soon to be ex-spouse is responsible to make payments on a joint credit card or joint loan, but fails to do so, it will negatively affect your credit. The credit agency does not care that it was your partner’s responsibility to make payments and failed to do so; your credit report will not reflect that it wasn’t your fault either.
How to Protect Your Credit During a Divorce?
Because you may still be tied to your soon to be ex-spouse through joint accounts like credit cards, mortgages, bank loans, home equity loans, or apartment leases, there are things that you do to protect your credit score and your credit report. The goal is to come out of the divorce process with as good a credit score as possible so that you will not be limited by a low score when you want to get your own credit cards, bank loans, buy a new house, or lease your own apartment. Here are some things to consider:
- Summarize your accounts: Make a detailed summary of every account that you have, whether it is solely in your name or is a joint account with your spouse. Put the account on the list if will be listed on your credit report. List out the credit limit and balance on every credit card, bank loan, or mortgage. The idea is that you do not want to forget a particular account and have it go into default, or forget about it to be exploited by your spouse or by scammers. The summary also gives you a better idea of your financial status.
- Close joint accounts: If possible, close any account that is jointly owned by you and your spouse. The account can usually be closed even if there is still a balance on it. The purpose of this is to make sure that either you or your spouse can use the account and make charges without the other knowing. Once the account is closed, an agreement can be reached as to how it should be paid off and by whom.
- Check authorized user status on your accounts: Even if a credit account is solely in your name, you may have granted your spouse authorized user status in the account during the marriage, which you may have forgotten about. Remove them as an authorized user so that their finances no longer impact your credit score.
- Develop a debt payment plan: You and your soon to be ex-spouse should develop a plan for repaying your debts in the smartest way possible. The plan should first prioritize the joint debt that you are both responsible for. Once the joint debt is paid off, you will officially be truly separated from your spouse after the divorce decree is finalized and signed by the judge. The smartest way to pay off the joint debt is to first pay down on the debt that has the highest interest rates, which will usually be credit card debt.
By focusing on the above tips and plan, you will put yourself in a better financial position once the divorce is finalized.
The answer to the question “can a divorce hurt my credit score” may seem complex: between the status of your debt, your current credit score, the level of contention with your soon-to-be-ex, and the intertwined nature of your finances with your ex’s finances, there are a lot of moving parts. While the best way to keep your credit in good standing is to stay vigilant with your finances regardless of marital status, unexpected events happen still happen to the most financially prudent people. In that event, your best bet is to contact a skilled divorce lawyer to help you sort out the resulting confusion.
The Marlton Divorce Lawyers at Goldstein & Mignogna, P.A. Help Their Clients Through Difficult Divorces
If you are considering getting a divorce or are currently going through a difficult divorce, what law firm you hire will dictate how well you make out in the divorce. Hiring a skilled lawyer will make the difference in getting to the end of the divorce in the best financial shape possible. Our knowledgeable and empathetic Marlton divorce lawyers at Goldstein & Mignogna, P.A. focus their practice on successfully litigating difficult divorces. Call us at 856-890-9400 or contact us online for an initial consultation. Located in Marlton, New Jersey, we serve clients throughout South Jersey, including Burlington County, Camden County, and Gloucester County.