Will a Divorce Affect My Credit?
Getting a divorce does not directly affect your credit. So, you do not necessarily need to worry about whether you will wake up one day to your phone alerting you that your credit score has dropped due to your recent divorce.
However, when you are thinking about filing for a divorce or going through the process of divorce, you may want to keep in mind that it can indirectly affect your credit in various ways. Here are a few different ways that this can happen:
1. You will have less income after your divorce
Most couples put their money together to tackle the bills each month. However, now that you are divorced, you will quickly realize that you have less income on your own. In the beginning, this may cause you to fall behind on bills as you are adjusting to a brand-new lifestyle, which could lead to your credit score dropping.
2. Your ex-spouse may forget to pay a joint bill
When couples have joint bills, it can sometimes become difficult to convince companies to remove one name from the bill. You may think that this is no big deal as you both can continue to pay the joint bills together. However, this can lead to a tricky situation where your ex-spouse forgets to pay their part of the bill. As a result, the bill isn’t paid on time, which can affect your credit score.
3. You may be required to pay some of your ex-spouse’s bills
One of the main elements of the divorce process is dividing assets and debt among ex-spouses. Texas is a state that participates in marital debt division. Therefore, marital debt will be divided equally between both ex-spouses.
If you plan to make the argument that you did not have anything to do with the debt, that does not matter as Texas sees marital debt as all debt that accumulated during the marriage. That said, you might be required to pay for some of your ex-spouse’s bills that you never had to pay before. It is important that you fit these bills into your new budget. If you refuse to pay them, your credit will become significantly affected.
4. Your name may still be associated with certain accounts
It is critical that you take the time to remove your name from certain accounts, such as your ex-spouse’s credit card accounts, loan accounts, and other joint accounts. You will also want to make sure that they remove your name from accounts that you cannot access as well. While this task may seem tedious and time-consuming, you must call or visit the companies to ensure that your name is taken off. If you fail to do this, both of your names will still be associated with the accounts. This means if your ex-spouse misses a payment, your credit scores will be negatively impacted.
If you are unable to remove your name, it may be wise to discuss with your ex-spouse about closing the accounts and starting your own individual accounts. This will give you peace of mind, knowing that your accounts are in your name only.
5. You may need to refinance your home
Refinancing a home is a great way for individuals to save money after divorce. However, this tends to affect people’s credit. The reason that this usually happens is because hard inquiries typically show up after refinancing, which can cause your credit score to drop.
6. Your credit card company may lower your credit limit
When your household had two incomes bringing money in, you most likely enjoyed the luxury of a high credit limit. However, now that you only have one income, credit card companies may decide to lower your credit limit. This may cause you to panic if you use your credit cards often and already have a high amount of debt on them.
While you may be tempted to open more credit card accounts to help you pay this debt, you should refrain from doing this as it may only cause more damage to your credit. Instead, you should pay off the credit cards you already have. This will ensure that you do not go too far into debt.
7. Your ex-spouse may have lied about their assets
Unfortunately, it is not uncommon for an ex-spouse to lie about certain things when going through a divorce. They may lie about their assets and other important factors, which could lead to you receiving more debt than you expected. This often happens when individuals add their spouse’s name to their accounts without informing them. To find out every single account that has your name on it, you should request a credit report.
What to do if you find errors on your credit report
If you find errors on your credit report, it is recommended that you dispute them as quickly as possible. You can do this by following these six steps:
- Review your credit report.
- Prepare to dispute the errors.
- File the disputes with all three credit bureaus, which are TransUnion, Equifax, and Experian.
- Get in touch with the data furnisher.
- Review the responses.
- Look over your new report to ensure that the errors are gone.
While divorce may not directly affect your credit, it can take a toll on your finances. Therefore, it is extremely important that you create a plan before and after your divorce to help you avoid any negative impacts to your credit. If you need help doing this, the divorce lawyers at Grable Grimshaw PLLC will happily assist you with developing this plan as well as advocating for your rights during negotiations with your ex-spouse. Our goal is to not only secure the best outcome possible but to also ensure that you are financially stable after your divorce is finalized. Call our San Antonio office or submit our contact form to schedule an appointment today.