Knowing your credit score

Divorce and Your Credit Score


Increasingly, I am seeing people who are thinking of a divorce, in the middle of a divorce, and have completed their divorce worried about their credit score. Will the divorce lower my score? Will I be hurt by my spouse’s failure to pay debt? What can I do to protect myself?

It is a good idea to think about these issues. Your credit score has a big impact on your financial life – getting a loan, interest rates, getting the best deal, etc. You can take steps to protect yourself, but you need the facts first. Do a credit check and see who your creditors are. It sounds funny, but you may be listed on debt incurred by your spouse and you don’t even know it.

Just because you are divorced (or may get a divorce) doesn’t keep your spouse’s behavior from hurting you. It is common in any division of debt for each party to take some of the bills (I get the Visa and you get the Master Card). If both of you are on the account, regardless of what the Divorce Decree says, if your former spouse fails to pay the debt, the creditor will come after you for payment and his or her poor payment history will reflect on your credit score.

There are ways to be protected throughout the process, but it takes a lot of investigation and aggressive follow up. Sometimes it is possible to have your name removed from a debt as part of the divorce process, but more often your spouse cannot qualify to go it alone. A well drafted Decree of Dissolution can go a long ways toward giving you the protection you need. If done right, most of the time you can avoid problems with your credit score.
I often see problem that impact credit scores arise at the beginning of a divorce. Payments are missed because the parties can’t agree on who pays which debt. Irregularly occurring debt is missed – like quarterly insurance payments. Bills aren’t paid because the direct withdrawal for the payment comes out of a now closed account. It makes sense for you and your spouse to try to sit down and get this worked out as best you can at the very beginning. It will help both of you keep your good credit, and save problems from popping up after the divorce is final.