Divorce and Your Credit Score
Thousands of people get divorced every year in Virginia. Whether you are planning to file for divorce, have already filed, or are about to finalize a divorce, you need to understand how this process will affect your credit score. For the most part, the divorce process itself will not directly affect your credit score. It is the financial decisions that you and your spouse make related to the divorce that will have the most impact. These financial implications can negatively impact your credit score, which can create financial difficulties after the divorce is finalized.
Joint Accounts Remain on Your Credit Report
Every account listed on a credit report is reported for each individual tied to that account. So, if you are the cosigner, an authorized user, or a joint owner of any account, it will appear on your credit report before, during, and after a divorce unless you take care of it prior to the divorce. You have two options when dealing with an account of this kind: closing the account and opening one only in your name or ensuring that your name is removed from the account entirely.
Should you leave your name on the account, it can cause you a lot of financial trouble in the future. For example, if the other spouse decides not to pay their fair share of the debt on the account and you fall behind in your payments as a result, it will affect both of you and your credit scores. The same goes for vindictive former spouses. If your former spouse has access to joint accounts, he or she might try to intentionally hurt your financial situation knowing it might give you trouble securing housing, buying a car, or opening a new credit card account.
You Struggle to Pay Your Bills
Another issue that may adversely affect your credit score during and after a divorce is when you struggle to pay your bills. Many people who have gone through divorce wind up paying a lot of money on attorney’s fees or when dividing assets with a former spouse. If you were not the breadwinner in the relationship, it can wind up costing you in divorce, especially if you’ve yet to find a new job. All of these situations could lead to you having difficulty paying your bills. When you fail to pay your bills, these late payments are recorded on your credit score, and your overdue accounts may even be sent to a collection agency, all of which will negatively impact your credit score.
Your Credit Limit is Lowered
It is also possible that your divorce could indirectly lead to your credit limit being lowered by the creditors who hold your accounts. Creditors routinely check your income status, and if you have gone from two incomes in the household down to one, it can impact the amount of credit lenders are willing to give you. For example, you may see the charge limits on your credit cards being lowered, which severely limits your spending power. If you rely heavily on using credit cards for monthly expenses, such as food shopping and paying some utility bills, you won’t have much room left on these cards if the balances are not paid down every month.
Refinancing the Marital Home
In some divorces, one spouse will keep the marital home instead of the couple selling it and then dividing the property. When you are moving the ownership of the home to just one person’s name, it will most likely need to be refinanced. And the refinancing process might be more difficult when you are using one income instead of two.
Call to Schedule a Consultation with an Experienced Attorney
Are you facing a divorce? If so, it is time to speak with an experienced family law attorney about your situation. Call the office of Buck, Toscano & Tereskerz, LTD., Attorneys at Law at 434-977-7977 to schedule a consultation, or send us a message through our web contact form. Don’t let divorce negatively impact your finances. A poor credit score will make it difficult to rent an apartment, acquire a loan or mortgage, buy a car and much more. Our skilled attorneys can help protect your financial situation when you get divorced in Virginia.