Divorce changes many aspects of life, from family routines to finances, but one area often overlooked during the process is your credit score. While the act of getting a divorce does not directly lower your credit score, the financial consequences of divorce can have a significant impact if not handled carefully.
Divorce Itself Does Not Affect Your Score
Credit reporting agencies do not treat divorce as a negative event on your credit report. There is no category for “divorce” that lowers your score automatically. Instead, any changes to your credit score come from how you handle joint financial accounts during and after the divorce.
Common Ways Divorce Affects Credit
Here’s some ways that your divorce could ultimately impact your score:
1. Missed or Late Payments
If you and your spouse have joint accounts—such as credit cards, loans, or a mortgage—and miss payments during the divorce process, both of your credit scores can suffer. Even if a divorce decree states that one person is responsible for a debt, creditors can still report missed payments against both parties if the account is jointly held.
2. Increased Credit Utilization
After divorce, you may have less income but the same or greater expenses. If you start relying more on credit cards or loans, your credit utilization ratio may increase, which can lower your score.
3. Closing Joint Accounts
Many divorcing couples close joint credit accounts. While this is often necessary to prevent unauthorized spending, it can reduce your available credit, which may also lower your score.
4. Legal Costs and New Debt
Divorce often involves court fees and changes in housing, which can result in taking on additional debt. New debt can impact your credit score, especially if it significantly changes your overall financial picture.
How to Protect Your Credit During Divorce
Luckily, there are a few different ways you can help protect your credit during a divorce:
- Check Your Credit Report Early: Reviewing your credit report helps identify all joint accounts and catch any unauthorized activity.
- Separate Accounts Quickly: Move toward individual accounts and ensure joint accounts are either paid off or refinanced into one party’s name.
- Make All Payments on Time: Even during negotiations, keep paying all shared debts until ownership is legally transferred.
- Create a Post-Divorce Budget: Understanding your new financial reality helps prevent missed payments and excessive reliance on credit cards.
Tulsa Divorce Attorneys
Divorce does not directly impact your credit score, but financial decisions made during and after the process can. By managing joint accounts responsibly, paying bills on time, and monitoring your credit report, you can protect your credit health during this major life change. Contact us today at Tulsa Divorce Attorneys & Associates by calling 539-302-0303 or contact us online.