People often work hard for most of their adult lives to build their credit history. Having a good credit score can make it easier to get a home loan, buy a vehicle or get a credit card. When a married couple builds their credit together, they may assume that they’ll be together to enjoy the benefits of good credit.
If a couple opts to end their marriage, they may be surprised to know that there are possible impacts to their credit reports. Understanding why divorce may affect a credit score can benefit anyone in this position.
Joint credit accounts can impact a divorcee’s credit score
Joint credit accounts are the primary way that credit reports can be affected by divorce. During the property division process, joint assets and debts are divided. The division is only valid between the two parties divorcing. Creditors don’t have to abide by the divorce orders because they weren’t part of the divorce proceedings.
One possible way to reduce the chance that a credit report will be negatively impacted is to liquidate assets to pay off debts. This takes away the chance that one party will avoid paying debts that will affect the other person.
Anyone who’s going through a divorce should understand exactly how the property division process will affect them. It may be beneficial to work with someone familiar with applicable laws so they can learn their options and determine how to move forward. The goal is to start out their new single life on the best financial foundation possible.