Divorce is a very serious and disruptive experience in anyone’s life that can change everything. During this time, you will have to adjust your entire living situation, consider all your assets, and think about the effects the divorce can have on your credit score. Also, all debts, regardless of if they are separate or marital will have to be settled after you have split up.
If you don’t have enough information on the situation or if you don’t plan ahead of time, a divorce may wind up impacting your credit score negatively. Keep reading to learn more.
How Can Divorce Impact Your Credit Score?
While there are quite a few people who understand that the dissolution of their marriage can impact their credit rating, they don’t exactly know how. While the divorce itself will not cause your score to lower, splitting up with someone can cause financial problems. Some specific things that may impact your credit rating after a divorce include:
Getting Behind on Your Bills
Life is something that comes with many expenses and during a divorce it is easy to get behind on payments due, which can impact your credit rating. By communicating with your ex-spouse in a civil manner about the bills can be both troublesome and stressful. In most cases, you are going to be impacted more if you made less than your former spouse.
Community Property Laws
Arizona is considered a community property state. What this means is that all the property that you gathered during the course of a marriage belongs to both you and your partner after a divorce. With community property, this means that if your partner took a loan out while you were married, it may also count toward your debt. If you can’t afford this and aren’t able to make the required payments, then you may be sued by the lender, which can result in a reduced credit score.
An Unpaid Joint Account
Chances are, if you were married, then you probably had a joint account with your spouse as well as a shared car loan, mortgage, credit card, or something similar. Even if you have no plans to stay with your spouse, you are still required to take care of any debts you have. Also, if your ex opts not to pay the bill, this may hurt your credit score.
If you get a divorce, then the decree will designate who is over every account. For example, you may have to cover the electric bill and credit card payments while your ex-spouse needs to cover the car loan and mortgage. However, if your ex does not pay or if they make a late payment, this will impact each of your credit ratings. The best way to handle this is by planning ahead and closing any joint accounts or transferring them to one person or another.
When a divorce is amicable, there are some spouses who opt to punish their partner by using a credit card and accumulating more debt. If they have the legal authorization to use the card, they are able to do this with no consequences, all while your credit is ruined. One way to avoid this issue is to never add your spouse as an authorized user, or remove then quickly.
Tips to Protect Your Credit While Getting Divorced
There are several things you can do to help protect your credit score while getting a divorce. These include:
- Close all joint accounts
- Watch your spouse’s spending
- Resist unnecessary spending
- Maintain records
- Pay off your debts
If you want to ensure your divorce doesn’t impact your credit score, use the tips here. You can also call the team at The Sampair Group at 623-777-3926 to learn more.