There are quite a few indirect impacts a divorce can have on your credit score. Just know that getting divorced in and of itself does not lower your credit score. There is no section for marital status on your credit report. It is how you handle all of the financial issues that come with divorce that impact your credit score and we will look at some of those issues in this post.
It might be wise to sell the family home, especially if there is still a mortgage on it, and then split the proceeds. Why? If you decide you want to keep the home, you will need to refinance the mortgage to get your former spouse’s name off of it. This will add a lot of debt to your name and hurt your credit score.
Still have joint accounts? If so, don’t expect your former spouse to play nice. It’s possible that your former spouse could clear out the accounts if they are mad at you. It’s important to open separate accounts as soon as you know you want a divorce.
Do you have a lot of marital debt? If so, make sure it is split evenly. If it is not, and you wind up with more of it than your spouse, your credit score will take a serious hit. The same goes for failing to disclose all of your debt during the divorce process.
If both of you worked during the marriage, dropping down to one income will impact your credit score and your ability to acquire new loans or lines of credit.
It doesn’t take much for a divorce to throw you into a financial struggle. There’s so much that can go wrong in an instant that can hurt you financially. It’s important to have a trusted financial planner or accountant, as well as an experienced divorce attorney, guiding you through the divorce so you can protect yourself financially.