What Happens to Your Credit After Divorce?

  • By Jillian Taylor-Mancusi, B.A., C.I.R.P

What Happens to Your Credit After Divorce?

Finances are seriously affected during a divorce, but divorce and credit problems don’t have to be the rule. By familiarizing yourself with what happens to your money and debt during a divorce, you can take steps to protect your assets and your credit.

What Happens to Your Credit After Divorce 

Your divorce itself doesn’t actually impact your credit score because marital status is not indicated on your report.  What can affect your credit, however, are the complications that sometimes occur after the split. Some of these financial problems include:

  • The loss of two incomes. Expenses that were easy to keep up with on two incomes can become difficult to meet when salaries are no longer pooled. It’s tempting to use credit cards to make up the difference, but the payments can easily overwhelm your new, smaller budget.
  • Supporting a household on one salary. As a newly single head of household, you become responsible for all of the costs associated with housing and utilities, transportation, food, and education. If your budget is tight, it’s easy to fall behind with your mortgage payment.
  • The vindictive action of spouses. If your spouse raids and empties your joint checking and savings accounts, you may be unable to make payments on your home or other debts. Late and missed payments due to a lack of financial resources also can damage your credit. A malicious spouse can also run up credit card bills that the other spouse will be held responsible for.
  • Joint debts that fall behind.Responsibility for joint debts like a mortgage, car loan, or credit cards is often divided between both of you. If your spouse fails to make payments on a joint account, your credit may be harmed.

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How to Keep Divorce From Ruining Your Credit

Divorce and credit problems don’t have to go hand in hand. You can take steps to protect your credit rating by following these simple suggestions:

  • Keep paying bills on time. Contact your creditors early if you suspect you will have trouble making payments.
  • Close joint accounts so one spouse can’t max out credit cards or empty your checking and savings accounts. Consult with a legal professional about who is responsible for outstanding debts and how cash reserves will be allotted.
  • Open a credit card in your name to establish a credit history. This is especially important if your spouse provided the main source of your family income. Qualifying for a mortgage or car loan will be much easier if you establish your own credit history.
  • Consider selling your house and using the proceeds to pay off joint debts. This strategy can solve other problems as well. If you own a home with your spouse, selling your home will allow you to share the equity you have earned. Also, without a mortgage, you avoid the possibility of a late house payment and the resulting damage to your credit.

The financial challenges that result from divorce and credit problems that sometimes follow can be difficult to cope with. These tips, along with advice from trusted legal and financial professionals, can help you avoid damage to your credit.

Jillian Taylor-Mancusi, B.A., C.I.R.P

Jillian has worked in the insolvency field since 1992. She is a graduate of the University of Manitoba. She received her Insolvency Counselor’s Qualification Certificate from Ryerson Polytechnic University in 1998, and in 2007 she attained her license as a Licensed Insolvency Trustee. Jillian is a Read More Jillian has worked in the insolvency field since 1992. She is a graduate of the University of Manitoba. She received her Insolvency Counselor’s Qualification Certificate from Ryerson Polytechnic University in 1998, and in 2007 she attained her license as a Licensed Insolvency Trustee. Jillian is a member of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). She is Past President of the Manitoba Association of Insolvency and Restructuring Professionals (MAIRP).Jillian has held positions on the Armstrong Point Association, Executive of her local EDA Riding Association, Manitoba Highland Dance Association, and the Continuing Education Committee of CAIRP. Previously, Jillian was the Treasurer for the Parent Association at her daughter’s school. Currently, Jillian serves as the Vice Chair for Dressage Winnipeg. Close

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