It is easy to get caught up in the stress of a divorce and disregard aspects of your separation from your spouse that would impact your credit score. Being aware of the potential credit effects a divorce can have ahead of time can help you prepare for your future.
Location
If you live in a community property state, you may be held liable for debts that your ex-spouse accrued during the marriage--whether you agreed to those debts or not. If your ex-spouse does not pay the debts, derogatory entries will be placed on your credit report for debts you were not even aware of.
Benefits
If your divorce decree requires you to sell and pay off marital assets, this can positively impact your credit score. Loans that are paid off are positive credit report entries and look good to future lenders.
Disadvantages
The length of your past credit history accounts for 15 percent of your credit score. If accounts that you hold jointly with your ex-spouse were your oldest accounts, when those accounts are canceled, your credit score will drop.
Considerations
Some creditors may be willing to allow you to keep your current accounts open and remove you ex-spouse's name from the account. This depends upon the creditor and your current credit score.
Warning
Creditors are not required to abide by a divorce decree. By trusting that your ex-spouse will pay the debts assigned to him in the divorce that are in your name as well, you risk creditors pursuing you for the unpaid debt--and ruining your credit score.
0 comments:
Post a Comment