Money problems are one of the most cited contributory factors to divorces. Sometimes that comes down to different attitudes to spending and saving. Sometimes, it is due to the financial pressure of making ends meet.
If you have outstanding debts, you must take care of them in the divorce. Failing to do so correctly could have a massive negative impact on your credit rating.
Credit agencies do not penalize you because you divorce
While lenders might have made lending decisions based on your joint income, they will not drop your credit rating just because you move to be single. They may, however, penalize you due to what happens next.
If you have outstanding joint loans or credit card debt, divorcing does not automatically make those the responsibility of one person as far as the lender is concerned.
If you agree in the divorce that a particular debt stays with your spouse, make sure you get your name off it. Otherwise, if they fail to make the payments on time, it will continue to affect your credit score, not just theirs.
The best thing to do when divorcing is to close all joint accounts and cards and either cancel all outstanding debts or put each one into one person’s name only. That way, you each take responsibility for your future credit ratings.
Divorce could be a great opportunity to build a better credit rating if your spouse’s financial irresponsibility is holding you back. Consider legal help to understand more and give yourself a solid financial platform to build from.