Most people often wonder “what is my credit score?” after a divorce because divorce often leads to couples complaining that their credit has been damaged, but this isn’t because of the divorce itself. Your marital status isn’t found on a credit report and it isn’t factored into your overall credit score – thankfully.
But what you do during your marriage can cause you to suffer from bad credit. Joint accounts can result in you having bad credit. For example, if you added your spouse to your credit card and she racked up the bill, this would reflect on your credit utilization. And if you missed payments, this would lower your credit score.
There is also an issue with judges ordering one spouse to pay off the joint debt.
Since a judge ordered your spouse to pay the debt, you would fairly assume it will not damage your credit if payments aren’t made. But your creditor doesn’t acknowledge the judge’s order, and a missed payment will be placed on both your credit report and your former spouse’s credit report.
Bad Credit Following Divorce
Once your divorce is finalized, you’ll also find that bad credit has a long-reaching consequence.
Perhaps you were a homemaker that did not work during your marriage, you never took out credit (maybe you don’t even have any credit history) or you used your husband’s credit to secure a mortgage or get an apartment. You will find that it’s a difficult path ahead.
When you have bad credit, you’ll have difficulty:
- Obtaining a mortgage
- Getting an apartment
- Connecting utilities without a down payment
- Obtaining a car loan
And since you may not have a recent employment history, it will be even harder for you to secure a loan, rent an apartment or even hook up basic utilities, such as water service, without a down payment.
When you get divorced, you’ll also be responsible for:
- Joint Credit Accounts: Closing accounts is a wise choice, but debts will need to be satisfied. If the account remains open, there is a chance that a missed payment will result in both your and your ex’s credit being damaged.
- Joint Loans: The name on loans can be changed, but if they remain joint loans, you will be responsible for any missed loan payments. Car loans, mortgages and other loans should have the name changed on the loan where possible.
When debts are so high that neither spouse can afford outside help from companies like North Shore Advisory or satisfy the current payments realistically, bankruptcy is also an option. While bankruptcy will be a red flag on your credit history, it will allow you to start fresh and rebuild your credit over time.
The Micklin Law Group, LLC is a New Jersey law firm specializing in family law and estates. Attorney Brad Micklin was recently named to The National Advocates list of Top 100 attorneys from each state. Brad has a special expertise in working with high asset divorces. You can read more on this topic by visiting our Divorce blog. To set up a consultation, call 973-562-0100.