There are many consequences–both good and bad–of filing for a divorce and permanently and legally separating from one’s spouse. While these consequences can extend to the personal and the private, certainly affecting relationships and feelings, many of the consequences of divorce are financial. Indeed, when one is separating from their spouse, they will need to consider the economic repercussions of doing so, and may have to ask–and answer–tough questions about supporting oneself, tax consequences of divorce, and more.
One question that our clients often ask is whether or not getting a divorce will impact their credit score. While the act of filing for divorce alone will not have an impact on one’s credit score, other elements of divorce could affect one’s credit health. Here’s what you need to know about the impact of divorce on your credit score, and steps that you can take to keep your credit in good standing.
How a Divorce Can Impact Your Credit Score
Again, simply filing for a divorce will not have an effect on your credit score; however, there are multiple ways that divorce could take an indirect toll on your credit standing and your overall financial health. Consider these ways that a divorce could impact your credit score:
- You start to fall behind on payments. For whatever reason, it’s possible that a person may start to fall behind on their credit card and other payments as a result of a divorce, and as such, their credit score is negatively impacted. You may fall behind on payments because you’re distracted by the divorce and simply have too much on your plate to effectively manage, or you may miss payments because, as a result of the divorce, you no longer have the economic means to make payments on time and/or in full.
- Your (ex-) spouse starts to miss payments. Another situation that could affect your credit score is in the event that your ex-spouse starts to miss payments. Keep in mind that, just because your spouse has been ordered to pay down debt as part of a divorce judgment, this does not necessarily mean that they will. If both you and your ex-spouse’s names are connected to a debt and you are counting on your ex paying that debt, you are taking a risk.
- Your ex has access to your credit cards. It’s best to have your spouse’s name removed from your credit card and bank accounts the minute that you decide that you want to file for divorce. While it’s unlikely, if you have an especially vindictive spouse who has access to your credit cards, they may rack up credit card debt intentionally, which could ultimately harm your credit score.
- You have to refinance your home. Depending upon how property is divided in your divorce, you may end up with ownership of your home. However, in order to afford your home, refinancing may be a necessity. Refinancing your home will result in a credit inquiry, and, could have an effect on your credit score if paying your mortgage solo means taking on more debt than you can really afford.
- Your credit limit is decreased. When a couple separates and there are no longer two sources of income contributing to costs of living, a credit card company or bank may decide to decrease a single person’s credit limit as such. This could impact your credit utilization percentage, which is one of the factors in your overall credit score.
How to Maintain Good Credit During a Divorce
If you’re going through a divorce, you have a lot of different things to worry about and maintaining good credit health should be one of them. Bad credit can impair your ability to do everything from rent an apartment to take out a loan and much more. Some tips for maintaining good credit during a divorce include:
- Remove your spouse’s name from your credit card and bank accounts as soon as you know that divorce is imminent;
- Make paying your credit cards on time and in full a top priority;
- Create a budget that takes into account how much you can afford and how debts can be mitigated; and
- Work with a skilled divorce lawyer who can help you to obtain a favorable asset and debt division judgment.
Call the Alsobrook Law Group Today
To learn more about debt and divorce and how our lawyers at the Alsobrook Law Group can provide you with quality legal representation, please call our lawyers directly today at 334-737-3718 or send us a message telling us more about your situation. We offer consultations over the phone and in person at our Opelika office.