No, after the finalization of a divorce a person’s credit score is not directly affected. However, there are other ways that a divorce can indirectly affect your credit score. This happens through late payments, loss of income, and the possibility of having your name attached to outstanding debts you didn’t know still existed. Let’s dissect each one of these possibilities and how they affect your credit score. We’ll also look at the ways to prepare for these circumstances before they occur.
Late Payments
One of the main factors that goes into your credit score is payment history. If you miss a payment or make it after the due date, your score could drop when it’s updated at the start of the following month. When it comes to a divorce, there could be a dispute as to which person should take over an account. For instance, car insurance. After a divorce, it could be unclear as to which spouse will keep making payments on a shared vehicle. If neither partner agrees to make a payment during the time in which the settlement is being made, it could lead to a dock on both parties’ credit scores. This is why it’s so important to map out all of your shared financial accounts ahead of time. This way, you can easily see all financial commitments and split responsibilities in a fair manner.
Loss of Income
If a household relies on one spouse’s income, a divorce could greatly impact the other spouse’s financial situation. This is especially true if the spouse losing income has acclimated to a certain lifestyle. Credit scores could take a hit in this instance due to the sudden inability to cover the entire credit limit. Here are a few ways for a divorced person to try and navigate the hurdles of lost income:
- Sell your car and buy a less expensive one.
- Prioritize expenses like buying groceries instead of eating out.
- Budget and stay on top of expenses.
Name Attached to Debts
There’s nothing worse than finding out your credit score dropped because of something completely out of your control. This is exactly what happens to people when they’ve been through a divorce and still have their name attached to an ex-spouse’s account. For example, let’s say your name is still attached to your ex’s credit card. If they make a late payment or don’t pay a monthly amount in full, it could impact your score. This is why it’s important to remove your name from all accounts attached to your spouse. This should be done by not only submitting a written request but also over the phone. When you call the creditor, you can confirm your name is removed and make sure it’s not somehow added again in the future.
How Long Do I Have to Remove My Name?
You typically have one month to remove your name from any of your ex-spouse’s accounts. It should be noted that this timeline can look different depending on each couple’s circumstances. The main variable in play is the date on which you file for divorce and the billing cycle on any accounts. Since most accounts roll over during the first week of the month, if you file your divorce the following week you would have roughly three weeks.
One tip to keep in mind – act as quickly as possible and you won’t have to worry about this timeline. In some cases, a divorce attorney can assist you with this process and help you get in touch with different creditors before the divorce is finalized.
For more information on how a divorce could impact your credit score, contact the Law Offices of Jonathan Merel, P.C. today.