Can Divorce Ruin My Credit?

Yes, it can. It probably will, unless you hire a good financial planner and a good attorney well ahead of the time you decide to file for divorce.

Most credit can be extended to immediate family members. When credit is extended to a family member, the principal member assumes the primary responsibility of paying the amount due on the credit card or credit obligations. Most often, credit extensions are extended to spouses.

Most couples undergoing divorce or have been divorced for some time, get surprised that they are billed for things that they have no knowledge of having bought. Situational examples are:

1. Your ex-spouse has stolen your identity. Your ex-spouse used your name and Social Security number to obtain credit without your knowledge.

2. Your ex-wife or ex-husband is an extended credit card holder. You being the co-owner are still liable for charges made on the credit card that your ex-spouse has been using. Joint accounts make you responsible for any debts entered by the two of you.

When these things happen, you would certainly be at a point where you want to know what your credit rating is. You should be aware that punctuality in paying debts and the extent of your debts are factors in evaluating your credit score. Your financial history of paying your debts is reported by credit reporting companies to credit scoring companies. Results of these are provided to lending institutions or companies who will decide on whether to grant you a loan or not.

Divorce can ruin your credit if you do not close your accounts ahead of time. Post-divorce credit problems can be avoided if you immediately close your joint accounts with your spouse. Most lenders do not honor divorce decrees. Creditors can still collect payment from the other spouse. The problem in this case is when the other spouse refuses to pay or fail to pay. This will affect the credit score if debt is unpaid on time.

Close accounts that are in both of your names. This one action can salvage some of your credit rating.