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Your credit score and divorce

| Apr 12, 2019 | divorce |

Getting a divorce is a serious decision that you should never make on a whim. You need to think it through because there will be a lot of implications on your personal life, especially if you have children with your spouse. One misconception about divorce is that it has a direct impact on your credit score. This is not true because your marital status is never listed on your credit report. There are indirect impacts on your credit score from divorce, however, and we will discuss them here today.

Dropping from two incomes to just one will impact your credit score. It will also affect whether or not you will be approved for a new line of credit for an auto loan, a new credit card or another type of financing.

Are both of your names still on some accounts? If so, if your former spouse fails to pay the bills, both of your credit scores will take a hit. Even if the judge ordered your former spouse to handle those bills, the credit company will report both names on the account for delinquency.

If you keep the family home instead of selling it, you will need to refinance it to have just your name on the mortgage. This will cause you to incur a lot of debt and will lower your credit score.

It’s also possible that your credit company will review your situation, notice your income has decreased and could lower your credit limit on your credit cards.

As you can see, divorce can play a big role in your credit score indirectly. Make sure you have an experienced accountant, financial planner or other trusted professional at your side when going through a divorce to guide you in the right direction.