Going through a divorce is never easy, even if you and your spouse knew this day was coming. Divorce is difficult for couples of all ages and lengths of marriage, and it is especially hard on children. Divorce can also have a ripple effect on your credit score. The physical act of divorce will not hurt or improve your credit score, but all of the financial implications from divorce can negatively impact your credit.
The biggest financial impact of a divorce is dropping down to one income from two. This will impact your credit score immensely as you now only have one income when applying for a loan, mortgage or another type of financing.
Are you planning to keep the marital home? If so, one name will need to be removed from the legal documents. This often leads to refinancing of the home, which can put a lot of debt on one person’s record.
If you keep both spouse’s names on a credit account, it can hurt your score if the other spouse fails to make monthly payments. Since both names are still on the account, both are responsible for the debt. This means both credit scores will suffer.
Your credit will take a big hit if the debt from the marriage was not divided equally. For example, if you take on more debt than your spouse, your credit score will drop more than their score.
Now that you see how the financial implications of divorce can negatively impact your divorce, you need to prepare as much as possible ahead of time. This is best done with the help of a divorce attorney who knows what will hurt your credit score when getting a divorce.