Conversations about divorce usually revolve around who gets the home and other assets and who gets custody of the children. While these topics are important, couples must also figure out how to handle their debts once they go their separate ways.
Divorce can cause significant changes in your finances and impact your credit score.
Creditors and the divorce decree
You might be wondering if creditors must follow the divorce decree. Creditors are generally not bound by the terms of your divorce, as it is a civil matter that they have no participation in. This can mean the creditor may still expect you to pay debts that you co-own with your former spouse. Overdue payments can reflect on your credit report even if the other party is responsible for them.
This is why you need to take the necessary steps to help better ensure that your credit score remains strong even after your divorce.
Maintaining a good credit score after divorcing
There are ways to maintain your credit score after you and your spouse have parted ways. One thing to review is the status of credit cards. Gather information on what credit cards are currently in your name as well as which you share with your former spouse. Discuss how to handle these accounts during the divorce. This will reduce the risk of any surprises in the future.
The same is true of any joint loans or mortgages. Review the status of these legal agreements, taking note of who is listed on the accounts, and plan before you finalize your divorce.
Your income may also take a hit following your divorce and have an indirect impact on your credit score. Shifting from a two-income home to a single-income home may mean less money for your loan and credit card payments. Consistently paying your bills on time can prevent your credit score from taking a hit.
Taking the time to discuss how you and your former spouse can split up assets and debts before you finalize your divorce can help you to maintain a good credit standing.
