Your credit might be impacted by divorce, plan accordingly



When you get a divorce, everything in your life can change — including your credit. Your credit report is likely going to reflect the divorce in a few ways. Your debt-to-income ratio will change because your spouse’s income isn’t going to count on your credit report.

Another thing that might change is your credit score. Your debts are part of the property division process. If your ex is responsible for paying off some accounts and doesn’t, that might be reflected on your credit report as a derogatory mark.

This is an interesting thing that many people don’t understand about property division — even though the court order covers who is supposed to pay what, the creditors don’t have to follow that order. A divorce is a civil matter. Creditors only have to abide by the terms if they are part of the case, which doesn’t happen in a divorce. Only you and your ex are parties.

You might be able to reduce the risk of your ex ruining your credit by closing joint accounts. If possible, the balances could be transferred to individual accounts held by the person who is responsible for paying the debt. Some creditors might not want to do this because of the changes to the credit report because of the divorce.

As you work through the terms of the divorce, make sure that you carefully consider how each point might affect you in the future. This helps to ensure that you aren’t left trying to cover things your ex should pay or having to deal with the consequences for years to come.

Source: FindLaw, “Credit and Divorce,” accessed March 24, 2017