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Will a divorce cause your credit score to plummet?

On Behalf of | Oct 14, 2021 | Uncategorized |

If you are preparing to end your marriage, you undoubtedly have some concerns about your financial well-being. After all, you may have to adjust to living on a single income. Fortunately, in addition to receiving an equitable share of your marital estate, you may also be eligible for spousal support to help you make ends meet.

In the aftermath of your divorce, you may want to purchase a new home or buy a new car. Doing either, of course, often requires having a good credit score. Even if your personal credit rating is solid now, you may wonder how a divorce may affect your future ability to secure a loan.

No automatic effect

By itself, your divorce does not have any effect on your credit score. That is, your credit score remains the same regardless of the status of your marriage. Nevertheless, some divorce-related financial realities may cause your credit score to fluctuate or drop.

Your outstanding debt

Even if you negotiate ownership of debt with your spouse and your settlement becomes part of your divorce decree, there are no guarantees your creditors will honor the arrangement. Often, creditors continue to pursue payment from divorced spouses who are no longer legally responsible for the debt. If you refuse to pay, your creditors may put a negative mark on your credit report.

Your ex-spouse’s future actions

Closing joint accounts can take some time. If you and your ex-spouse continue to share accounts after your divorce, your ex-spouse’s actions may be disastrous for your credit score. For example, if your former husband or wife misses payments or makes late ones, your credit score is likely to take a serious hit.

There are ways to protect your credit score in the lead-up to your divorce and the months after it. Ultimately, addressing as many money-related matters as possible during your settlement negotiations may be one of the more effective ways to keep your personal creditworthiness intact.