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How might divorce impact your credit?

When you go through a divorce, many aspects of your life will change. One of these is your finances. Some people are shocked to find out that divorce can have an impact on your credit. For some, the impact isn’t considerable, but there are times when it can have a major effect on your life.

The change in your marital status doesn’t have an effect on your credit. Instead, it’s the loss of income and how accounts in your name get paid that may affect your credit. When you lose your spouse’s income without being able to remove any of the debt from your name, your debt-to-income ratio goes up. This might make you appear as an unfavorable credit risk.

How will joint accounts affect your credit at divorce?

Your divorce is a civil matter between you and your ex. The creditors aren’t a part of that agreement. Because of this, the creditors don’t have to follow the terms of the divorce decree, so they can still hold you liable for any joint accounts. This means that if your ex is supposed to pay for an account that has your name attached and fails to make the payment or makes it late, it will impact your credit.

If you’re concerned about the impact the divorce will have on your credit, discuss this with your attorney. They might be able to offer suggestions in the property division portion of the divorce that could pay off some creditors. This may help reduce the chance that your ex will miss payments that would affect your credit.

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