Does Divorce Affect Your Credit?
Many people will experience a hit to their credit during or after a divorce. However, it’s not the divorce itself that affects the credit—marital status has nothing to do with how your credit report is calculated. It’s the financial repercussions of your divorce that could result in your credit taking a hit.
Losing a household income could cause some financial strain that results in it becoming harder for you to make all of your payments on loans, credit cards and other bills. Payment history is a big factor that plays into your credit score, so missing payments could cause a big drop in your score. In addition, if you still have joint responsibilities for debt with your ex, you might not miss any payments at all but still see a hit to your credit if your ex fails to make payments on joint loans or accounts.
With this in mind, here are a few steps you should take to protect your credit after a divorce
- Change your lifestyle: If you’re working with a reduced income, then you should be sure to adjust your lifestyle so you’re living within your means. This could involve selling your house, or it could simply involve adjusting your lifestyle and cutting expenses.
- Put together a thorough budget: Having a spending plan will help you adjust to your new financial situation and determine what you can or cannot afford. Make sure you prioritize all of your most important expenses that you simply can’t cut out first. Keep up with all the payments that will have the biggest impact on your credit score, such as loans and credit cards.
- Separate debts: As part of your divorce negotiations, work to get your debts separated so you have as few joint responsibilities for debts as possible. This means you won’t have to worry about whether or not your ex is paying their portion of the bills.
- Open separate accounts: Close joint credit accounts you have and open separate ones as another means of protecting yourself against financial recklessness on the part of your ex.
For more tips, contact an experienced divorce lawyer at Bryan L. Salamone & Associates.