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Divorce and Your Credit Score

Posted on in Divorce

divorce and your credit score, Crystal Lake divorce attorneyDivorce is an intensely emotional process for many people, but that fact should not obscure its more practical dimensions. For instance, people going through divorce should take steps to ensure that their credit score does not drop as a result of the process.

Some people worry that their credit score will drop merely as a result of going through a divorce. While that is not true according to one of the major credit bureaus, divorce can still affect people's credit indirectly. This can happen in two ways. First, divorce can affect credit because it has to do with assigning debt and closing down joint credit accounts. Second, it can affect credit going forward because divorce may mean a change in people's financial situations.

Deal with Joint Accounts

One of the biggest ways divorce can harm a person's credit is through the property division process. Property division involves more than simply dividing up all of the items the spouses own. It also allows courts to apportion the marriage's debts, such as mortgages and joint credit cards. This can be harmful to people's credit because assigning the debt to one person does not affect the lender's credit reporting. If the spouse responsible for paying off the debt does not pay, then it can hurt both spouses' credit scores.

However, paying off as much debt as possible during the divorce process can be a great help. For instance, if neither spouse is keeping the marital home, selling it to pay down the mortgage can make finances much easier later. Similarly, even if one of the spouses is staying, it can be possible to refinance the home so that the other spouse is no longer responsible for the mortgage.

Spouses should also be careful to ensure that they close all joint credit cards. Some people have been known to use them as weapons in divorce by racking up large payments to which they want the other party to be responsible.

Budget Well

Credit protection also requires an active approach going forward in the form of proper budgeting. Divorce often changes people's financial situations. While child support and alimony can often make up some of that gap, they may not make up all of it. Consequently, people should take an afternoon to sit down and assess their new cash flows and new expenses. Hence, people can understand their new finances and avoid overusing their credit cards, which can be harmful to a person's credit.

People can often be nervous about how divorce is going to impact their lives. While this is understandable, there are many proactive steps people can take to make the transition easier. If you are considering filing for divorce and want to learn more about the process, contact a Crystal Lake divorce attorney today.

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