How Does Divorce Impact Your Credit Score?

When going through a divorce, there is a lot to think about. If you have children, you may miss out on time with them post-divorce. Or, you may lose property that has a great deal of monetary or sentimental value to you. It is certainly a turbulent time, and you may not even consider all of the impacts of divorce. For example, you may not have considered the fact that your divorce might impact your credit score.

For many people, it is only after their divorce is finalized that they realize their credit score is much lower than it once was. Sometimes, this does not happen until months after the case has been finalized. It is important to understand why credit scores are impacted by divorce, so you can protect yours.

Why Does Divorce Cause Credit Scores to Drop? 

When going through a divorce, it is natural for it to be the only thing on your mind. However, the same is not true for the people and businesses you interact with. The credit reporting bureaus are not bound by divorce decrees and they will calculate your score post-divorce in the same manner they did while you were married. If you still have joint accounts with your spouse, they will still appear on your credit report and ultimately, impact your score. If your former spouse was ordered to pay debts on those joint accounts and they do not, it will impact your overall score.

In a survey published by Experian, one of the major credit reporting bureaus, women are more negatively affected by financial issues during a divorce than men. Fifty-four percent of female respondents in the study stated that their credit score dropped while they were married. Also, 50 percent of women stated that their credit was ruined by their former spouse. The biggest reason for this is the wage gap that still exists.

Fortunately, while divorce can negatively impact anyone’s credit score, it does not have to.

How to Protect Your Credit Score During Divorce 

The best way to protect your credit score is to close any joint accounts you have with your spouse, including credit cards. It is best to do this before you officially start your divorce. Also remove your spouse as an authorized user on any account that is in your name.

If you have a mortgage, you should refinance it once the divorce is finalized. This is usually a necessary step anyway, as it removes your spouse’s name from the loan. This can allow you to start rebuilding your own credit, increasing your score.

Our Divorce Lawyer in Delaware County Can Advise on Your Case 

At Barbara Flum Stein & Associates, our Delaware County divorce lawyer can advise on all aspects of your case and offer recommendations on how to protect all aspects of your life. Call us now at 610-565-6100 or chat with us online to request a consultation with our experienced attorney and to learn more about how we can assist with your case.

Sources:

legis.state.pa.us/cfdocs/legis/LI/consCheck.cfm?txtType=HTM&ttl=23&div=0&chpt=33&sctn=1&subsctn=0

experianplc.com/newsroom/press-releases/2017/how-much-of-a-role-do-finances-play-in-divorce