Experienced Lawyers Protecting Divorcing Couples in Jacksonville
You already know how divorce will affect your finances, but one area you may not have put much thought into is how divorce could hurt your credit. Therefore, if you are in the middle of a divorce, now is the time to question how it could impact your credit score in the future, and what steps you and your attorney can take to avoid it.
Does Divorce Ruin Credit?
A divorce does not directly affect your credit, because a person’s marital status is not factored into his or her credit score. However, there are effects of divorce that can lower your score and leave you with a negative credit history to clean up.
Three Ways a Divorce Harms Your Credit
1. Your Ex Does Not Pay the Joint Bills
The easiest way for a divorce to harm your credit history and score is when you share credit accounts, such as a mortgage or credit cards. After all, someone has to pay them, regardless of whether you plan on divorcing. After the divorce, those joint accounts must be paid as well.
If your ex-spouse is responsible for paying those debts and does not, then it will harm your credit score because you share those debts with your ex. If your ex already has poor credit, he or she may have no incentive to take care of the joint accounts.
Ideally, you and your spouse should not have to worry about something like this, but it does happen. With the help of your divorce attorney, you can ensure joint liabilities are taken care of so that you are not at risk for a credit decline because your ex decided not to pay for debts.
2. You Cannot Afford Debts
After a divorce, you may find yourself struggling financially. After all, you lived on dual incomes and now you must live on your own income. This can cause significant financial strain, and you may find that you cannot pay your debts.
If the debts are in your name, and in your sole responsibly, failure to pay for them will affect your credit score. If they go to collections or a creditor files a lien against you, it could last for up to 10 years on your consumer credit history and greatly affect your ability to secure new credit.
Sometimes, it is best for a couple to file for bankruptcy, especially if they will have significant changes to their income and cannot afford debt obligations.
3. An Ex-Spouse is Vindictive Enough to Purposely Ruin Your Credit
This is rare, but not unheard of. If you and your spouse did not separate on good terms, your spouse may feel vindictive enough to access your credit, run up credit cards, add loans, and add as much debt as possible.
This is typical if a spouse is an authorized user on a credit account, and you leave his or her as such post-divorce.
After the divorce, or even during the process, make sure you are removing your spouse from authorized user status on any credit cards and accounts. When he or she is an authorized user, the ex-spouse can ruin your credit without it harming his or her own score.
Need Assistance Protecting Yourself in a Divorce?
If you are going through a divorce, it is imperative that you speak with a divorce attorney about your case. An attorney can help protect your best interests, but also protect your credit and financial well-being.