Reviwed and approved by Kathryn Wayne-Spindler
Divorce can significantly impact your finances, including your credit score. As you navigate the complexities of your divorce, it’s essential to be aware of how it can impact your credit and take steps to protect your credit. In this article, we’ll explore how divorce can affect your credit scores and provide you with valuable tips to protect your credit.
Understanding the Impact of Divorce on Your Credit Scores
Divorce can impact your credit score in several ways. Here are some of the most common:
- Joint Accounts: If you have joint accounts with your spouse, you’re both responsible for the debt. If your spouse stops making payments, it can also impact your credit score.
- Dividing Debt: During a divorce, debts must be divided between spouses. If one spouse is responsible for a debt but fails to pay, it can impact both credit scores.
- Closing Accounts: Closing joint accounts can impact your credit score, as it can affect your credit utilization ratio.
- Check Your Credit Report: Check your credit report to see where you stand. Look for any errors or fraudulent activities and report them immediately.
- Communicate with Your Spouse: Communicating with your spouse about joint debts and how they will be divided is essential. Try to devise a plan to pay off debts as soon as possible.
- Close Joint Accounts: Close all joint accounts to prevent any new debt from being added. You can also consider transferring the balance to individual accounts.
- Open Individual Accounts: Open individual accounts in your name to establish credit and build a positive credit history.
- Pay Your Bills on Time: Pay your bills on time to maintain a good payment history and prevent late fees and penalties.
- Get Professional Help: Consider seeking professional help from a financial advisor or credit counselor to help navigate your finances during a divorce.
Divorce can be a challenging and emotional time, but it’s essential to protect your credit. By understanding how divorce can affect your credit scores and taking steps to protect your credit, you can minimize the impact of a divorce on your finances. Remember to check your credit report, communicate with your spouse, close joint accounts, open individual accounts, pay your bills on time, and seek professional help if necessary. By following these tips, you can protect your credit and start a new chapter in your life with financial stability.