Divorce hits you from every direction. It is an emotional roller coaster for you and your family. It also can have an impact on your credit score.
Your marital status is not part of your credit report. However, unless you are careful, a divorce can damage your credit score.
How divorce impacts your credit score
Your household finances take a hit in a divorce. You no longer have a combined income. The bills keep coming in, though. This can lead to missed payments. If the bills are in your name, your credit score suffers.
Confusion also leads to missed payments. Spouses sometimes disagree on who should pay certain bills. It may become a game of “he said, she said,” with your credit rating becoming a victim.
A judge may appoint one spouse to handle joint debts. If your spouse fails to make payments, this will affect your credit rating, too. Some vindictive spouses even may do this on purpose.
How to protect your credit score during and after divorce
Two factors determining your credit score are payment history and level of debt. Protect them and you protect yourself:
- Downsize your lifestyle. This may mean moving from a house to an apartment and other changes.
- Create a realistic budget that prioritizes expenses.
- Do not rely on alimony or child support to cover your main expenses. Your spouse may miss or skip payments.
- Sever financial ties with your spouse as soon as possible. Close accounts that are in both of your names. Cancel his or her authorization to use your credit cards.
- Determine individual responsibility for debts.
- Do not trust your spouse to make payments on debts that carry your name. Track the accounts.
- Pay your bills. Even small payments protect your credit score as you straighten out your debts.
Your credit score and your future
Starting your life over with a good credit score makes the transition easier after going through a divorce. It is one less thing that you have to worry about. Financial stability is your goal. You can protect yourself and your family.