TalkingParents. A communication platform for co-parents. Sign in Open navigation
Parenting resources

How Divorce Affects Credit

A messy divorce can take a toll on a person’s finances, resulting in late bill payments or higher-than-normal credit card debt when covering the extra costs.

Marital status does not affect creditworthiness, so filing for divorce does not immediately hurt your credit score. However, many divorcees experience problems with their credit after the fact.

A messy divorce can take a toll on a person’s finances, resulting in late bill payments or higher-than-normal credit card debt to help cover the extra costs. These are the types of things that can negatively affect your credit.

Divorce Reduces Your Income

If you were a two-income household before the divorce, you are now a one-income household. If your ex-spouse was the primary breadwinner, you are now dependent on timely alimony payments or securing a new job for income.

This change in financial situation can result in missed bill payments or increased credit card debt, both of which can hurt your credit score. Divorce can also result in credit card companies reducing the amount of credit you are eligible for if your joint income isn’t as high as it used to be. You may now have a higher debt-to-income ratio, which can affect your credit score as well.

If divorce has reduced your income, it’s important to create a new budget for yourself and accept making some lifestyle changes. Are there monthly luxuries you can do without, such as music-streaming services or gym memberships? Should you sell your home or car? These are the types of hard, but necessary, decisions you might have to make to maintain a strong credit rating.

Joint Debt Is Neglected or Abused

Do you and your ex have joint credit card accounts or joint debt, such as a mortgage or car payment? If accounts are in both of your names, both of your credit scores can suffer for non-payment of the joint debt, regardless of whom the judge orders to pay the bill.

If your ex is not paying his or her share of joint credit debt after divorce, you have no choice but to pay it yourself or suffer the credit consequences. You can try to go back to the court later to sue for reimbursement, but it won’t help you at the time.

A problem that arises in some divorce situations is that one spouse purposely runs up joint credit card bills to hurt the other spouse. Because of this, it’s best to separate all joint accounts as quickly as possible. You may need to work with your lawyer to find out what you legally can and cannot change, especially if your spouse will be relying on you for ongoing support.

Another problem that can come up in a divorce situation is that one spouse does not fully disclose all his or her debts. Hiding assets or debts during a divorce is, unfortunately, a common problem. It is also illegal, which is why retaining the services of a competent attorney during your divorce is extremely important, even if it does cost more in the short-term.

Divorce is Chaotic

Divorce is a complicated and overwhelming process, especially if there are kids or significant assets involved. It’s easy to overlook everyday chores and bill payments when you’re in the middle of a divorce. Some people also end up missing bill payments because they forget to do simple things, such as notifying the post office that they changed their address.

To stay organized and on track with your finances after divorce, request a copy of your credit report from the three major credit reporting agencies, Equifax, Experian, or TransUnion. Make a note of all debts in the report, close any joint accounts that can be closed, and make sure you are receiving the monthly statements for all other open credit accounts. Even after the divorce, continue to monitor your credit report to prevent any errors.

Divorce can add up

While separating spouses may amicably work out visitation and custody agreements, only a court of law can issue a divorce decree. This means you either hire a lawyer or try to proceed through the divorce court system (and the piles of paperwork and legalese that most of us aren’t familiar with) on your own.

Most people opt to work with a divorce lawyer, and if your divorce is at all complicated or hostile, the bills can add up quickly. It’s important to do your homework, surround yourself with competent advisors, and take the necessary steps to protect your creditworthiness now and for the future. For more information on how to financially prepare for divorce, click here

Sign up today

Start communicating with your co-parent through TalkingParents. Keep your co-parenting life organized and accountable.

Sign up now

Share this article