Will divorce impact your credit?

On Behalf of | Dec 22, 2021 | Firm News

After your divorce has finally gone through and you have the finalized process behind you, you will likely want to move on. Buying a new house or a new car might top your to-do list, and you will likely need loans. To get a good loan, you need good credit.

Unfortunately, a divorce could potentially have a negative impact on your credit score. But in good news for you, this is not an inevitability.

Dividing up your debts

Bank Rate discusses how debt gets handled in divorce situations. First, if you and your spouse both took out a loan or handled a mortgage together, or if you share a credit card, then you also share some of the burdens of debt. Even after the divorce has gone through, you will still share these burdens until you pay the debt off. Unfortunately, if your ex-spouse refuses to pay up, your credit score might be the one that suffers.

Ways to minimize the impact

You can head off these problems before they start in many cases, though. For one, you can take your name off the credit card that you share with your spouse. Or, if your spouse does not want the card either, you can both work together to close out the account. If you have a loan that you jointly took out, you could also potentially refinance it. In doing so, only you or your spouse could hold responsibility for paying it off.

In some situations, you can even pay off your debts before the divorce has been finalized. This allows you to get all of your matters settled, so you no longer have to get involved in one another’s financial business after the split.

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