Getting a divorce is never an easy process for both interested sides. As it often happens, the end of a marriage may induce many difficulties and problems in life. The most common include the division of assets or child custody. However, in many cases, divorcees also want to know if a divorce can affect their credit score. Here is everything you ought to know about it.
Does Getting a Divorce Affect Your Credit Score?
Divorce is a significant life upheaval that can have an impact on a variety of facets of your life. Most commonly, it affects your financial habits and commitment routines. Moreover, you also face a lot of crucial choices throughout this process. However, it is always a good idea to keep a careful check on your credit score.
If you will ever be getting a divorce, you need to keep in mind that it might affect your credit reports. Therefore, it is crucial to take a closer look at what you should be concerned with.
Article that may interest you: Protect Your Credit During a Divorce
How a Divorce Can Affect Your Credit Score
First of all, we need to state the obvious. Your credit report does not indicate your marital status, i.e. whether you are single, married, or divorced. Hence, the divorce itself does not have any effect on credit scores. What matters most is the way you manage any joint accounts with your ex-spouse. These are the main factors influencing the potential negative effect on your score.
While you and your soon-to-be-ex-spouse focus on the legal process, you might forget about other commitments. The most widespread issues include situations when you overlook the upcoming:
- Credit card bills;
- Loan payments;
- Any other debt payments.
Many divorcee couples possess joint credit cards, mortgages, or car loans. Paying those obligations in time is what keeps your credit score high and intact. On the other hand, failing to do so in time, may potentially cause difficulties in the future.
We shall take a closer look at what happens when your divorce affects your credit score.
Joint Debts and Missed Installments
Financial experts underline that many people mistakenly believe that because a judge gave their spouse liability for some joint obligations, they are no longer required to pay them. As long as the debt is still on your credit record, missing payments may still impact your credit score.
This happens only when joint accounts still appear on your credit report, therefore, you should deal with those records. Even if you are a cosigner or an authorized user, your ex-partner’s missed installments will affect your credit score. From a legal point of view, you are still responsible for such obligations.
Closing Joint Credit Cards
Another impacting factor is having joint credit cards with your ex. However, it is good to remember that closing credit cards are always a good idea. No matter what your marital status is.
The main reason to close your credit cards is to maintain a high credit score. However, in some cases, it might go lower after the divorce. This happens because of the high utilization impact any credit card has. On the other hand, you will be able to start with a clean slate and build your score anew.
Rebuild Your Credit After a Divorce
Having a solid credit history is crucial now more than ever since going through a divorce signifies the start of a new chapter on your own. If your credit score has been affected negatively by your changing marital status, you might want to find ways to rebuild it.
We cover some of the most successful ways in our next article.