Having spent years building up a good credit rating, the prospect of losing it during divorce can be a worry. Yet, with the proper precautions, it need not be.
Credit companies will not punish you for ending your marriage. There is no automatic downgrading of your credit score once you become single. Yet, there are pitfalls that could damage your ability to seek future credit.
3 ways to predict your credit score during divorce
Here are three things that can help ensure ending your marriage does not end your ability to borrow:
- Separate your accounts early: As soon as you decide to divorce, open separate bank accounts and credit cards and close the joint ones if possible. It prevents you from taking the blame for anything your spouse does. You might not be able to shut all accounts — divorce courts sometimes issue an order to stop you from doing this if they think it may prejudice the other party.
- Be realistic about your finances: Living a single life will typically cost more per person than living as a couple. Unless, of course, your spouse insisted you eat oysters for dinner every night and watered the garden using Evian. If you underestimate what you will need to live on, it will make it more likely you get into debt you cannot pay and ruin your credit score.
- Avoid retaining property together: You might decide to keep the house and share the mortgage. Yet, doing so means your credit score depends on the other person’s prompt payment of their share of the mortgage and household bills. If you no longer want to share a bed, you should probably not share anything financial either.
Understanding property division laws will help you fight for the settlement you need. If you walk away with less than you should, it will make future financial difficulty and a plummeting credit rating more likely.