Can a Divorce Affect My Credit Score?

 Posted on January 15, 2025 in Divorce

Divorce is a challenging life event that can have far-reaching consequences, including financial ones. While divorce itself does not directly change your credit score, the financial actions taken during and after a divorce can significantly impact your credit health. By understanding potential risks and properly planning, you can protect your credit score during this transitional period. An experienced Illinois family law attorney can guide you through the financial aspects of divorce to help minimize its impact on your financial future.

How Can Divorce Lead to Credit Problems?

Divorce often involves dividing marital debts and assets, which can result in financial complications. In Illinois, marital debts, just like assets, are subject to equitable distribution. This means they are divided fairly, but not necessarily equally. 

If your name stays on joint accounts or loans after divorce, you may still be held responsible for payments, even if a divorce decree assigns the debt to your ex-spouse. Issues like missed payments, increased credit usage, or account closures can lower your credit score, making it harder to secure loans or favorable interest rates in the future.

What Steps Can You Take to Protect Your Credit During Divorce?

To safeguard your credit score during a divorce, consider the following steps:

• Review Your Credit Report: Obtain a copy of your credit report to identify all accounts and debts associated with your name.

• Close or Separate Joint Accounts: Work with your ex-spouse to close joint credit cards and accounts or transfer balances to individual accounts. 

• Create a Budget: Adjust your budget to reflect your new financial reality and ensure you can meet all debt obligations.

• Pay Off Joint Debts: If possible, settle joint debts during the divorce process to avoid future conflicts and prevent payment issues that could harm your credit.

• Closely Monitor Accounts: To avoid surprises, monitor joint accounts until they are fully closed or transferred.

What Should You Do If Your Ex-Spouse Fails to Pay a Joint Debt?

If your ex-spouse fails to pay a debt assigned to them in the divorce decree, creditors can hold you responsible if your name is on the account. To avoid this situation:

• Include Clear Provisions in the Divorce Decree: Work with your attorney to ensure the decree specifies who is responsible for each debt and includes conditions for paying off joint debts.

• Consider Refinancing or Consolidation: This can eliminate your liability for debts assigned to your ex-spouse.

• Take Legal Action: If your ex-spouse does not obey the divorce decree, you can seek enforcement through the courts.

How Can You Rebuild Your Credit Post-Divorce?

If your credit score has been impacted during your divorce, there are steps you can take to rebuild it, including:

• Make On-Time Payments: Payment history is a significant factor in your credit score, so it is wise to pay all bills on time.

• Reduce Credit Usage: To improve your score, aim to keep your credit card balances below 30 percent of your credit limit.

• Avoid Opening New Credit Accounts: Instead, focus on responsibly managing your existing accounts.

• Seek Professional Advice: A financial planner or credit counselor can help you create a strategy to achieve long-term financial stability.

Contact a Kane County, IL Divorce Attorney for Credit Protection Advice

If you need guidance about how to protect your credit during a divorce, a knowledgeable St. Charles, IL divorce attorney at Goostree Law Group can help. Call 630-584-4800 today to schedule a free consultation to learn more about the services we offer.