divorce and your credit score

Can Divorce Impact my Credit Score?

Getting a divorce is a major step that will impact your life in numerous ways. You will need to figure out living arrangements, your overall income and net worth will most likely drop, and if you have children together with your spouse, you will need to figure out how you will parent them while living separate lives.  

While a marriage dissolution will almost certainly affect your financial circumstances, it does not have a direct impact on your credit score. Just like when you get married, the act of filing for divorce does not cause the credit reporting agencies to lower your score. So, all things being equal, the divorce itself will not negatively affect your ability to obtain credit.

Unfortunately, things do not remain “equal” after a divorce. The effects of the process can and often do impact your credit score. There are things that can occur in conjunction with a divorce that can adversely affect your credit. Here are three of the most common examples:

Tighter Finances

The cost of a divorce and/or the decrease in income that results from it can make it more difficult for you to pay your bills. This is especially true if your spouse was the primary breadwinner.  One of the major factors in determining your credit score is on-time payments. Usually, a payment that is a day or two late is not going to get recorded on your credit report. However, if you are 30 days (or more) late with your payments, this can cause your credit score to drop significantly. If at all possible, try to pay at least the minimum amount due before the due date to avoid this happening.

Another factor that credit agencies looking at is your credit usage. If you are forced to use a higher percentage of your credit limits because of your divorce, this could also cause your score to drop. Watch your credit limits carefully and try to save as much of your credit as possible for emergencies.

A Deadbeat Spouse

Most couples have some joint credit accounts, and these accounts can become a major problem during a divorce. Examples of joint accounts may include your home mortgage, auto loans, joint credit cards, and joint personal loans. Although the court may have ruled that your ex-spouse is responsible for certain joint accounts, this is no guarantee that they’re going to get paid. And if these bills don’t get paid, your credit score is going to suffer.

Perhaps your ex-spouse is not as concerned about his/her credit as you are. This is often the case when one spouse was in charge of the finances in the household, and the other has always been weak in this area. If you have accounts that are in both of your names, keep a close eye on them, even if your ex-spouse is the one who is supposed to pay them. You may need to make at least minimum payments on these accounts to protect your credit for the time being. Later on, you can try to recover the funds directly from your ex or through the courts.

A Vindictive Spouse

This third issue is similar to the previous one but taken to a greater extreme. Rather than your ex-spouse just not paying their bills, you may end up with a situation where they purposely run up credit out of spite or grief over the divorce. This happens most commonly when a spouse is an authorized user on another spouse’s individual credit account. The spouse who is an authorized user can run up charges without any consequences, leaving you to pay the bill. To prevent this from happening, take steps immediately once you know you’re getting a divorce to remove your spouse from any accounts that are in your name. It would also be a good idea to close any joint credit accounts that have little to no balance on them. Do everything possible to separate yourself from your spouse financially. This is the best way to limit the chances of your credit being damaged during the divorce process.

Contact an Experienced Connecticut Family Law Attorney

If you are facing a divorce in Connecticut, it will affect your life in many ways, and you need skilled counsel in your corner to provide legal guidance and moral support. At The APEX Law Firm, LLC, we know that divorce is costly both emotionally and financially, and we give our clients the strong personalized representation they need during this difficult time. Call our office today at (860) 900-0900 to schedule a consultation. You may also send us a message through our web contact form or stop by our Hartford County office in person at your convenience.