It takes hard work to make a marriage work, but sometimes something comes along that badly damages the relationship. Similarly, it can take years of paying your bills on time to build your credit score and just one mistake or unavoidable crisis to knock it down again. If you are thinking about getting divorced, you may be wondering if divorce is one of those things that can harm your credit score.
The short answer is no. Getting divorced does not affect your credit report. At least, not directly.
Joint lines of credit and your divorce
As everyone knows, every time you are late on a payment on a credit card, electric bill or other debt, it can show up on your credit report and drop your score. While you were married, you and your spouse may have opened several joint accounts. A joint account can be convenient for married couples. But when you get divorced, having a joint credit card account means you cannot control what your ex spends on that account — or if they will pay for them when the bill comes due. And because your name is on the account too, a few missed payments can do a lot of damage to your credit.
Closing your joint accounts would seem to be the answer. But closing a credit card account reduces what’s known as your credit utilization ratio, which is the amount of debt you have compared to the maximum amount of debt you can take out. Closing a credit card with, say, a $10,000 limit reduces your total potential debt by $10,000 and raises your credit utilization ratio. A sudden change in your ratio like this will cause your credit score to go down.
Fortunately, there are things you can do to minimize the damage. You can freeze your credit to stop your ex from trying to open new lines of credit in your name and monitor your credit reports for signs they have tried to do so.
Turning the page
Eventually, the effects on your credit score will fade. Meanwhile, you will have put your old marriage behind you and have prepared yourself for the next chapter in your life.