Collaborative Divorce Texas

  • Donate
  • For Professionals
    • Membership Advantages
    • Events/Training
    • Become a Member
    • For Students
    • Volunteer at CDT
    • Advertise With Us
  • Contact Us
  • Login
  • Home
  • Find a Collaborative Professional
  • What is a Collaborative Divorce?
    • What is Collaborative Divorce?
    • Frequently Asked Questions
    • About CDTexas
    • Master and Credentialed Collaborative Divorce Professionals
    • The Gay G. Cox Award for Excellence in Collaborative Law
  • Blog
  • For Collaborative Professionals
    • Membership Benefits
    • Events/Training
    • Become a Member
    • For Students
    • Advertise With Us
    • Volunteer at CDT
    • Login
  • Donate
  • Contact Us
  • What is Collaborative Divorce?
    • What is Collaborative Divorce?
    • Why Use a CDTexas Member?
    • About Us
    • Master and Credentialed Collaborative Divorce Professionals
    • The Gay G. Cox Award for Excellence in Collaborative Law
  • Testimonials
  • FAQs
  • Blog
  • Find A Professional
    • How Do I Choose a Collaborative Professional?
    • Attorneys
    • Financial Professionals
    • Mental Health Professionals
    • See All

Donate

You are here: Home / Blog / Ask Your Financial Planner: Will Divorce Affect My Credit Score?

Ask Your Financial Planner: Will Divorce Affect My Credit Score?

June 14, 2019 By Tracy Stewart, CPA Leave a Comment

divorce and credit score

A credit score is an important part of your financial well-being. So, it’s no wonder that many clients ask me whether divorce will negatively affect their credit score. After all, a solid credit score post-divorce can allow for job mobility and financed purchases, while a poor score can limit your options.

The answer to this question isn’t a straightforward “Yes” or “No”.

Divorce is complex to begin with, and there are many misconceptions at the intersection of divorce and credit history. Here are some facts to help you understand the landscape and prepare.

Fact: The act of getting divorced will NOT affect your credit score. 

The status of your marriage is not a factor in the score calculation.  So, hypothetically speaking, your credit score pre- and post-divorce should not change.

In practical terms, though, divorce can have a tremendous effect on your credit score. However, that has nothing to do with the divorce itself — and everything to do with getting into financial trouble. Here are some examples of situations that can lead to a drop in your credit score.

Mistake # 1: You miss payments

Missed payments can hurt your credit. This includes any bills in your name: mortgage, utilities, credit cards, and more. Consider all the emotional turmoil of divorce, add in having to re-assign autopay arrangements and change banking information, and this is a recipe for missing a payment and not even realizing it. Should that happen, you will have to deal with logistical consequences (i.e. service being turned off, insurance lapsing, account being sent to collections, etc.) — as well as a hit on your credit record.

Mistake # 2: Your ex-spouse misses payments on joint debt accounts

Keeping your joint credit accounts in place and asking your ex-spouse to make payments on them might seem like a good idea. It’s convenient, it’s easy, and if your divorce was mostly civilized, why not save yourself the trouble of shuffling the logistics?

And yet, this is a recipe for a problem. If your ex-spouse forgets to pay the bill (or decides to stop making payments altogether), your credit history is on the line. And the worst part is, you wouldn’t even know it — unless you monitor the status of each joint account closely. Which is why it’s a good idea to complete the divorce with no joint accounts.

Mistake # 3: You make an error on your budget

Your post-divorce budget is not as simple as your pre-divorce budget divided in half. Sure, some expenses may go away. However, many old expenses will remain unchanged. Some new expenses may pop up. Overspending and running up credit cards are all too common — and both can lead to credit score damage.

How can you ensure that divorce doesn’t ruin your credit history?

Here are three things you can do right now to protect your credit score during and after your divorce.

One, separate your finances from your ex-spouse. Make sure you are working from a complete list of joint accounts during the divorce process. Ideally, you want to close them (or remove your spouse as an authorized user). Credit card balances can be transferred over to individual cards, and each spouse should only be responsible for his or her accounts.

Two, work with your financial planner to build a budget. This is not a DIY project! An experienced financial planner will point out expenses you may have overlooked, help judge the reasonableness of your guesstimates, and help you understand how you can make ends meet (and thrive!) in your new status.

Three, build your emergency savings. Without them, any unexpected expense (a root canal, an emergency room visit, your car needing a new suspension, etc.) can upturn your financial boat and force you to carry a credit card balance. Doing so will ultimately hurt your credit score.

Finally, be sure to invest time in monitoring your credit post-divorce. That way, you can catch any mistakes and address them right away.

About Tracy Stewart, CPA

For over 15 years, Tracy Stewart has helped individuals and couples gain greater transparency of their money, plan for their post-divorce needs and provide invaluable considerations to help support retirement goals during divorce negotiations. Find out more about Tracy Stewart

Filed Under: Blog, Divorce and Finance, Our-Featured-Authors, Tracy Stewart

Leave a Reply

Your email address will not be published. Required fields are marked *

Find a Professional

Getting started with the Collaborative Process?

First your need to connect with a trained Collaborative Professional.

[Find Out More....]

Articles by Category

Featured Video

  • Child of Divorce
  • Collaborative Divorce Testimonial

Why Collaborative?

  • Jennifer Leister
  • Steve Walker
  • Carla Calabrese
  • Dawn Budner
  • Becky Davenport
  • Jody Johnson
  • Honey Schef
  • James Urmin
  • Kurt Chacon
  • Natalie Gregg
  • Robert Matlock
  • Deborah Lyons
  • Carlos Salinas
  • Camille Scroggins
  • Linda Solomon
  • Richard Soat
  • Lisa Rothfus
  • Jeffrey Shore
  • Barbara Cole
  • David Brunson
  • Jennifer Tull
  • Syd Sh
  • Susan Z. Wright
  • Christi Trusler
  • Camille Milnser
  • Linda Threats
  • Sarah Keathley
  • MaryAnn Kildebeck
  • David Bouschor
  • LIsa Marquis
  • Harry Munsinger
  • Vicki James
  • Robin Watts
  • Katie Berry
  • Jack Emmott
  • Jennifer Broussard
  • Patricia Havard
  • Paula Locke Smyth
  • Laura Schlenker
  • Norma Trusch
  • Brett Christiansen
  • Tim Whitten
  • Mickey Gayler
  • Melinsa Eitzen
  • Julian Schwartz
  • MaryAnn Knolle
  • Chad Olsen
  • Chris Farish
  • Charles Quaid
  • Anne Shuttee
  • Barbara Runge
  • Rhonda Cleaves -
  • Jamie Patterson
  • Catherine Baron
  • Kristen Algert
  • Sandra Roland
  • Rhonda Cleaves 2
  • Gratia Schoemakers

Have you read?

No Need to Reinvent the Wheel: Technology to make Co-parenting Easier

After divorce, communicating with the other parent in a child focused, businesslike manner can be maximized when parents utilize online systems for parents raising kids in two homes.  These … [Read More...]

More Articles from this Category

The Collaborative Law Institute of Texas

d/b/a
Collaborative Divorce Texas

Proud Members of IACP

1400 Preston Road
Suite 400
Plano, TX 75093
(972) 386-0158

Please note: Our office will be closed on

Holiday closures:
Limited: Nov. 23rd & 24th
Closed: Nov. 25th , 26th and 27th

Christmas:
Closed from December 24-December 30, 2022.
Offices open on January 2nd, 2023.


Website Terms of Usage

Contact Our Webmaster

 

Follow Us

  • Facebook
  • LinkedIn
  • Twitter
  • Vimeo
  • YouTube

Search Our Website

Find A Professional

  • Find a Collaborative Professional
  • Attorneys
  • Financial Professionals
  • Mental Health Professionals
  • See All

Copyright © 2023 · Collaborative Divorce Texas · All Rights Reserved

· · ·

Web Design and Maintenance by The Crouch Group