Does divorce affect credit score? Divorce does not directly affect your credit score. However, there are financial implications that surround divorce that may have an impact on your credit score.
Working with a Seattle divorce lawyer can help you understand how a divorce may impact you financially.
Does Divorce Hurt Your Credit?
Credit reporting agencies do not include marital status or divorce judgments in a person’s credit file. While divorce does not directly affect your credit score, other factors can play a part in divorce affecting your credit score. This can include joint debts, such as:
- Joint credit cards
- Mortgages
- Auto loans
- Personal loans
- Home equity loans
If payments are missed or utilization is high on any joint accounts, both parties’ credit is generally affected, regardless of marital status. Oftentimes, the courts will assign certain debts to one party or the other. Working with a Seattle family lawyer can help ensure these are assigned fairly and guide you through the process if the other party does not follow through on the court ruling.
Missed Payments During the Divorce Process Can Hurt Your Credit
During the divorce process, many people face financial struggles. Temporary loss of income, responsibility for bills, and new expenses such as child care and unexpected legal expenses may create financial strain, leading to missed due dates.
To help protect yourself financially, it is important that you do your best to maintain good standing on your financial obligations. Depending on the situation, some courts may determine that you should be repaid for these costs; however, that is decided on a case-by-case basis.
Payment history accounts for 35% of your credit score, according to MyFICO’s “How Are FICO Scores Calculated?“, so keeping accounts paid on time can help protect your score. During divorce proceedings, you and your attorney can petition for reimbursement or a split of these costs.
Closing or Dividing Accounts Can Affect Your Credit Profile
Another significant factor in your credit score is credit age. When going through a divorce and separating finances, you may end up closing some older accounts, which creates a temporary dip in your credit score. While this can feel like a hit at first, it is generally recoverable with time.
In addition to shortening your credit history, you may reduce your available credit, thereby increasing utilization. This generally resolves once you open your own accounts or reduce the amount of debt you have on your revolving accounts.
Lastly, you may have some new credit inquiries. These can also cause a temporary reduction in your credit score; however, according to Experian (How Is Your Credit Score Calculated?), these are generally less impactful and only remain on your credit report for two years rather than the standard seven. Overall, assuming that bills remain paid on time, your credit should not be drastically affected.
Property Division Does Not Automatically Remove Your Responsibility to Lenders
Many people assume that once the divorce court awards a debt to one spouse, the other spouse is no longer responsible. This is not always the case. Since both spouses signed for the debt, the lender may still hold both parties accountable unless the account is refinanced, paid off, or otherwise no longer a joint account.
If an ex-partner is assigned a debt and they do not pay it, the lender can generally come after both of you to recoup payment. In this scenario, your attorney can help you file a motion for contempt, which may result in the other party having their wages garnished, liens on their property, or the seizure of their tax returns.
Additionally, a judge may require your ex-partner to reimburse you for any funds you spent on debt payments to protect your credit score. While a divorce may not directly affect your credit score, an uncooperative ex-partner may put you in a compromising situation, so you must protect yourself.
There Are Steps You Can Take to Help Protect Your Credit During a Divorce
While divorce can be challenging financially for many reasons, there are things that you can do to protect your credit score and reduce the potential struggle to obtain credit later, such as:
- Monitor your credit reports regularly
- Continue making required payments
- Close or separate joint accounts when appropriate
- Keep records of shared debts
- Communicate with creditors if financial difficulties arise
- Establish individual credit if necessary
Being proactive in managing your finances and credit can help ensure your divorce doesn’t affect your credit.
Credit Problems After Divorce Are Often Preventable
Many post-divorce credit issues arise when joint accounts remain open, payments are missed, or spouses misunderstand who is legally responsible for existing debts. It is not unusual for divorces to stem from a lack of communication, so if both parties are not fully on top of finances, things may slip through the cracks.
There are ways to help protect yourself. Careful planning and communication throughout the divorce process can help alleviate financial stress and prevent the divorce from affecting your credit due to missed payments and overdue accounts.
Sometimes, these problems can be solved amicably, as both parties generally want to protect their financial standing. However, this is not always the case, and you may need to work with a Seattle high conflict divorce lawyer who has a deep understanding of how to manage uncooperative ex-spouses.
Your Credit Score May Recover if You Build Strong Financial Habits
Even if your divorce affects your credit, there are ways to bounce back quickly and minimize the impact. This can include:
- Making on-time payments
- Keeping balances low
- Avoiding unnecessary debt
- Monitoring credit activity
- Building a positive payment history
While adjusting to life after divorce can take time and come with challenges, protecting your finances early on can help minimize the potential effects on your credit. By upholding your responsibilities, you can help to protect yourself legally and financially.
Dellino Family Law Is Here to Help Protect You
At Dellino Family Law, we understand the challenges you are facing as you navigate a divorce. We believe that you should not have to do this alone. Contact us today to schedule a consultation and let us see how we can help advocate for you.
