{"id":358383,"date":"2022-02-08T10:42:00","date_gmt":"2022-02-08T17:42:00","guid":{"rendered":"https:\/\/www.creditrepair.com\/blog\/?p=358383"},"modified":"2022-04-25T19:25:12","modified_gmt":"2022-04-26T01:25:12","slug":"credit-repair-after-divorce-tips-for-protecting-yourself-financially","status":"publish","type":"post","link":"https:\/\/www.creditrepair.com\/blog\/credit-repair\/credit-repair-after-divorce-tips-for-protecting-yourself-financially\/","title":{"rendered":"Tips for Financial Protection After Divorce"},"content":{"rendered":"\n
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Money and marriage are tied tightly together, so it’s no surprise to many that money and divorce (unfortunately) go together too. In fact, studies show that disagreement over money is one of the strongest predictors of future divorce. And during and after divorce, it’s normal for people to experience financial distress. Understanding your options for credit repair after divorce and knowing how to protect yourself financially can help you shore up your future as a newly single person.<\/p>\n\n\n\n

How Does Divorce Affect Credit?<\/h2>\n\n\n\n
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It’s critical to understand how divorce affects credit.\nMany people hear stories about divorce wrecking someone’s credit. But it’s not\nthe divorce<\/em> that causes the\nproblem\u2014it’s the financial actions and decisions surrounding the divorce.<\/p>\n\n\n\n

Your marital status isn’t part of your credit report, and it’s not a factor in your credit score. According to Experian, the credit bureau, changing your marital status<\/a> in any way doesn’t, by itself, impact your credit.<\/p>\n\n\n\n

But that doesn’t mean divorce is going to leave your\ncredit file squeaky clean. Here are some common reasons people experience\ncredit hiccups following a divorce.<\/p>\n\n\n\n

1. Sudden Changes in Income<\/h3>\n\n\n\n

According to the National Bureau of Economic Research, family income can decrease by 40 to 45 percent<\/a> for people who divorce and remain unmarried for at least the next six years. Even if you don’t take that big a hit in a divorce, you’re converting from two people sharing income and expense responsibilities to one person handling their own.<\/p>\n\n\n\n

That can make it more difficult to keep up with payments<\/a>, leading to increased risk for late payments or even defaults on loans. Those negative items drag down your credit score. And, in worst-case scenarios, they can live on your credit history for seven years<\/a>.<\/p>\n\n\n\n

In extreme cases, post-divorce income can fall so short of\nexpenses that someone decides to file for bankruptcy. While bankruptcy does\ncome with a so-called financial clean slate, it also brings your credit score\ndown. Make sure you consider all your options and weigh the pros and cons of bankruptcy<\/a>\ncarefully before you decide it’s a pre- or post-divorce option for you.<\/p>\n\n\n\n

2. Your Ex Doesn’t Keep Up Their Part of a Bargain<\/h3>\n\n\n\n

It’s common, though not necessarily always the best\nidea, for married\ncouples to lean on each other when it comes to credit<\/a>. If one of you has good\ncredit, it may be enough to get approved for a mortgage, for example. But\nrelying on your spouse to carry the good credit name in a marriage can leave\nyou without a credit history if you get divorced.<\/p>\n\n\n\n

Even more risky is relying on your ex to help keep your\ncredit score safe after<\/em> divorce. Many\npeople are surprised to find, upon divorce, that their partner had previously\nhid financial facts from them. Around 45\npercent had some type of financial skeleton in the closet<\/a>, such as high\namounts of debt, secret spending or a hidden bank account.<\/p>\n\n\n\n

If you can’t rely on a spouse to have your best interests\nin mind when it comes to money, do you want to rely on an ex to do so? If you\nsplit up the debts and just agree to each pay your part, that’s what you’re\ndoing.<\/p>\n\n\n\n

Consider, for example, a situation where you own a car\ntogether. Both your names are on the loan, but your spouse takes the car and\nagrees to make the payments. If they don’t, your credit also gets dinged with\nthe late payment.<\/p>\n\n\n\n

3. Changes to Your Credit Profile<\/h3>\n\n\n\n

One option is to change the way your debts are\nstructured. Your spouse could take out a new loan for the car\nin their own name<\/a>, paying off the old one. You could close joint credit\ncard accounts after paying them off. One of you might buy the other out of a\nmortgage by getting approved for an all-new loan in your own name.<\/p>\n\n\n\n

This helps reduce your reliance on each other for\ncontinued good credit, but it could have some temporary impact on your credit\nscore. It’s important to understand these potential effects before you take\nfinancial action.<\/p>\n\n\n\n