Preventing Bad Credit During a Divorce
Posted on June 7, 2011
A divorce can not only be a painfully emotional time, it can also do a number on your credit rating forcing you to deal with financial hassles of credit repair in addition to the many other aspects of the process. While divorce proceedings do not directly harm your credit, the financial fallout from a contested divorce can damage it.
How Divorce Impacts Credit
Couples who marry typically combine and are jointly responsible for the various expenses and financial obligations obtained during the marriage. When a divorce is sought, couples often have issues dividing up those obligations and as a result some of the bills do not get paid. Whether the missed payments are done out of spite or simply due to the lack of funds, the scores of both parts of the former couple will suffer as a result.
Late or missed payments on your mortgage, credit card bills, or other financial obligations can drop your score by a lot of the financial trouble is long-term. Additionally, the black marks on your credit history will remain with you for 7-10 years. As a newly single person with a single income, it can be much harder to come back from bad credit and rebuild your financial life enough to regain a good credit score.
How to Prevent Debt Impact on Credit Scores
Ideally, couples looking to divorce should take the steps to work out the financial obligations. Any joint accounts or accounts where the other is listed as a cosigner or authorized account user need to transferred to the responsible party or have the account closed completely if one name can not be removed.
A decree of divorce is not going to affect the direct obligation you have with your creditors. It may spell out which party is responsible for which bill but if the responsible party does not make payments, credit scores will suffer for all listed on the account. Unfortunately, many couples become embroiled in nasty legal battles that rack up lawyer fees and still may not prevent missed creditors payments from a vindictive spouse.
If a relationship is headed towards divorce that may be less than amicable, you may be able to do preventative maintenance by contacting all of your creditors and letting them know the situation. They may have recommendations for the protocol of handling bill payments and account transfers during a divorce. It is wise for your particular role in the divorce to stick with making sure all the bills are taken care of promptly. Being vindictive and trying to hurt a spouse financially can also hurt your own credit history. It will be much harder to repair the excessive damage you caused your own credit score out of spite.
Getting Back On Track
It is best to list all creditors where your name is listed as a joint account holder and once the divorce is final be sure to keep tabs on the open accounts that may still be connected to your name. You should regularly check your credit report for unauthorized activity from your former spouse and to ensure the bills are getting paid. The more diligent you are, the more you will be able prevent divorce from destroying your own credit. In turn, this will make it easier to get on with a new life and a healthier financial profile.
- When Your Spouse’s Credit Affects Yours
- How to Deal When Your Kids Hurt Your Credit Score
- Where Does Credit Report Data Come From?
- Can A Cash-Only Philosophy Help Repair Your Credit?
- Another Score to Consider in Credit Repair