How Your Divorce Can Affect Your Credit, And What You Need To Know
Getting a divorce has so many different, complicated aspects to it, from the logistical to the emotional. Plus, divorces are expensive, and they can be a financial drain on one or both parties. Everything from lawyer fees to moving expenses can impact your finances and credit. When it comes to how divorce will impact your credit specifically, there’s a lot to learn.
Indirect Financial Effects of Divorce
It’s important to know that getting a divorce alone won’t impact your credit – the divorce may lead to financial troubles, though. For example, if your spouse moves out, you’ll miss out on their contributions toward living expenses, which could put you behind on your bills, thus affecting your credit. Or, the judge could determine that you alone are responsible for your joint debt, and if you’re not able to make the necessary payments, your credit (and the credit of your spouse) may be affected. It’s also possible that your spouse will purposely damage your credit out of anger or spite
Divorce and Your Credit Score
Divorce can have a big impact on your credit score, even if you’re used to it being steady and high. Your spouse can hurt your credit score, either purposely or accidentally. For example, while you’re divorcing, your spouse may be responsible for paying one of your joint credit cards. If they don’t make the regular payments on time, your credit score can go down by up to 100 points if the card is in your name or both of your names. Following a divorce, you may need to repair and rebuild your credit score, using the same tactics you’d use to build your credit score any other time.
Separating Joint Debts
As soon as possible, you should separate your joint debts. To make sure you’re not missing or forgetting any joint accounts, thoroughly go through your recent statements and your credit report. It’s possible that you have a forgotten account or credit card that has both of your names on it. Contact the creditor to close the accounts, and ask for a confirmation in writing. Also find out what will happen if your spouse calls and tries to have the accounts reopened. You may have to change the authorized users on the account so that you’re the only one who’s allowed to make changes to it.
This process isn’t as straightforward as it sounds. Your spouse may have to get their debts transferred to their own name or move credit card balances onto their own cards. If your spouse is uncooperative, this may not happen right away. In the meantime, it’s important to continue paying at least the minimum payments so that your credit isn’t impacted. You may also want to have a lawyer or mediator work with you to have the process go as smoothly as possible.
Adjusting Your Lifestyle
If your credit score is being affected because you’re no longer able to make payments on your bills, it may be time to adjust your lifestyle. You may have to start saving money, when maybe in the past you depended on your spouse to contribute to your savings account on their own. You may have to cancel certain subscriptions, change your daily spending habits, or even consider moving to a more affordable home or neighborhood.
Alimony and Child Support
As you’re budgeting, remember that you may now have to factor in divorce expenses like lawyer fees, alimony or child support. Some of these fees will be temporary while others will be more permanent. At the same time, don’t assume that your ex will be good about making alimony or child support payments to you. Even though the court will try their best to prevent it, some spouses skip payments, get the payment amount reduced or even quit their job so that they don’t have to make any payments to you.
The best approach is to make sure you can pay your necessities and bills out of your own income. Then, if you do get other income from your spouse, that can go toward extra spending money or savings. Once you’re divorced, it’s best to depend on yourself for your income, even if you feel that your spouse has the best intentions right now.
Dealing with a Vindictive Spouse
It’s unpleasant to talk about, but sometimes one or both spouses are angry at each other and opt to harm the other’s credit out of spite. The first defense against this is removing their access to your financial accounts, but this isn’t always possible. Also, you may not even realize that your soon-to-be-ex is thinking of harming your credit on purpose.
Even if you completely trust your spouse and everything seems to be going smoothly, one or both of your attitude’s can change in a split second. Divorce is tricky and emotion-fueled, and you don’t want your financial accounts to be at risk if you two stop agreeing.
One Last Thought
It’s very common for a divorce to impact your finances and credit score. The good news is that a lot of people go through this and are eventually able to bounce back. Also, having quality guidance throughout your divorce can help you save your credit as much as possible.