How Does Divorce Affect Credit Score?

How Does Divorce Affect Credit Score

Table of contents

If you are currently going through a divorce, you are not alone. Statistics show almost 50 percent of all marriages in the United States will end in divorce or separation. While this major life change can take an emotional toll, it can also greatly affect your financial stability and credit score.

How does divorce hurt your credit? Does divorce show up on a credit report? Here we look at exactly how a divorce can hurt your credit and what steps you can take to help protect your credit.

Key takeaways

  • A divorce does not directly affect one’s credit score, but the division of assets and accounts can affect joint accounts, credit card balances, and mortgages.
  • Joint accounts and credit cards can cause damage to credit scores if one party misses payments or if a joint account is closed, increasing credit utilization.
  • A divorce decree does not hold weight for mortgage debt and creditors do not honor it, so both parties are responsible for the mortgage.
  • Protect credit during divorce: Pay off accounts, contact lenders to convert joint accounts, make payments on time, consider home refinance, and monitor credit reports.

Divorce and credit score

Your credit reports do not contain your marital status, and signing divorce papers does not directly affect your credit. However, your accounts are often affected by the division of assets and accounts with a divorce.

Missing payments on joint debt

If you and your spouse have joint accounts, these are usually addressed within the divorce decree. A judge decides which debt each party is responsible for. Unfortunately, creditors do not take these judgments into consideration. In their eyes, this joint debt is the responsibility of both parties. Should your ex-spouse miss a payment, it will also affect your credit score.

Closing of joint credit cards

In many cases, couples decide to close joint accounts during a divorce. While closing joint accounts helps avoid any potential concerns of missing payments by the spouse responsible for the debt, losing a card with available credit can greatly affect your credit utilization. For example, you and your spouse each have individual accounts with a credit limit of $5,000 and then a joint account with an available limit of $5,000. The joint account has a full available limit, and your personal card has a balance of $2,500. With both cards, your credit utilization is 25%. However, if you close the joint account, your utilization is now 50%, contributing to a lower credit score.

Being removed as an authorized user on your spouse’s credit card(s)

An authorized user on a credit card gives the user the ability to access the credit without the obligation to make payments. However, as an authorized user, you receive the benefits (such as a decrease in credit utilization) to your credit score when the account holder makes consistent, on-time payments. Being removed as an authorized user from an account, you are likely to see an increase in credit utilization and a negative impact on your credit.

Couple with rings and divorce decree

Creditors don’t honor divorce decrees

Unfortunately, creditors do not honor divorce decrees despite going to court and receiving a judge’s order to divide your credit debt. If your name is on the account, you are still liable for the debt. If your ex-spouse decides to skip out on accounts that they were ordered to pay in the divorce, creditors can still come after you for payment, and the lack of payments can impact your credit report.

What happens to a mortgage after a divorce?

During a divorce, it is common for one party to maintain residence in the home they purchased together. In most cases, the divorce decree states which spouse maintains the home and is responsible for the mortgage payments. However, similar to credit card debt, the mortgage lender does not honor divorce decrees, and both parties are responsible for the mortgage. In this case, if your ex-spouse is awarded the home but does not make payments, the lender can come after you to collect a payment, and the lack of payments will reflect on your credit report.

How to protect your credit during a divorce?

When a divorce decree doesn’t hold weight for credit or mortgage debt, you must take the necessary steps to help maintain your credit. Some of these steps may not be possible, depending on your relationship with your ex-spouse. However, if working together is not possible, there are some things you can do on your own.

  • Work together: If possible, work together with your ex-spouse to gradually pay off and close existing accounts. For example, you can begin by freezing any new spending and agree to make equal monthly payments until the debt is paid in full.
  • Contact lenders: This is an important step for a variety of reasons. If you cannot work with your spouse to pay off and close joint accounts, talk to the lender about converting the debt to an individual account. If you believe all your debts are personal, it is still good to contact all your lenders to ensure your ex-spouse is not listed as an authorized user.
  • Make all your payments on time: Make sure you pay all your debts on time. For the joint debts your spouse is responsible for, it is good to call and make sure payments are still being made. If they are not, you can step in and avoid any damage to your credit before it takes place.
  • Consider home refinance: When both parties are on mortgage debt, consider getting a mortgage refinance or home sale if you are not the party retaining the home. This will protect your credit from defaulted home mortgage payments.
  • Check your credit report often: Because you are not aware of your ex-spouse’s activity when paying debt obligations, you must regularly monitor your credit report to help ensure their non-payment is not affecting your credit score.

Saving your home and credit score after a divorce

A good credit score is essential for purchasing your dream home. While divorce can take its toll emotionally, following these tips will help ensure that it doesn’t damage your credit score and your chances of owning your dream home.

At Hero Home Programs, our goal is to help everyone achieve the dream of homeownership, and helping maintain a good credit score is only the beginning. Schedule a call with us today to learn how we can help you find and qualify for the perfect home.

Jacquelyn Sublett
Jacquelyn Sublett

I love teaching and writing on real estate, finance and mortgage topics. I find it fulfilling hearing stories of first time home buyers who we have helped with the home buying process. Writer for the Hero Homebuyer Programs™

Connect with the Author:

Recommended Posts

What Our Buyers Think

Jules S.
Read More
"5 star service is what you will get when you work with him!ᅠ Not only does he know his product like no other, he makes a special point of communicating throughout each transaction and his follow up skills are unparalleled. Perhaps most importantly, he delivers on his promises!ᅠ Give him a try for your mortgage needs.ᅠ You will not be disappointed!"
Jeremy H.
Read More
"An outstanding job handling refinances.  One of those knowledgeable, straight-shooters - which is really appreciated when you're shopping for a home loan. He can answer a million of questions with ease.  Looking back at the responsiveness, he was outstanding and you can do everything he suggested."
Jaina D.
Read More
"You can rely on them, very professional and quick in responding to your queries. He is very friendly and makes sure we understand the process and keeps us posted on the status of our loan. His efforts are greatly appreciated."
Eshawn W.
Read More
“By far the best lender we’ve worked with. Got us the best loan amount than any other lender. He worked with us hand in hand, he is professional, and he made the process enjoyable.”
Jaina D.
Read More
"You can rely on them, very professional and quick in responding to your queries. He is very friendly and makes sure we understand the process and keeps us posted on the status of our loan. His efforts are greatly appreciated."
Cass Z.
Read More
“I called looking for information about the process of applying for a mortgage/refinance and am just blown away with how helpful the information I received was!”
Stephanie F.
Read More
“I have hope because of you for making my home ownership dream come true. I feel such a connection with you and am excited to work with you. Have an amazing day!”
Rachel S.
Read More
"Highly ethical, attentive and helpful! A fantastic combination of personable and hard working. He makes everyone feel important and understood."
Cliff S.
Read More
“Hands down the best mortgage professional I’ve worked with in 20 years. Knowledgeable, honest, reliable and above all an outstanding communicator.”
Jose A.
Read More
"He worked on getting the lowest rate and kept me informed on each step of the process from the beginning to closing. Thank You!"
Nicholas H.
Read More
“Thank you for your prompt help and AMAZING assistance. Hands down, best lender I have ever worked with. Top notch!”
Tiffany
Read More
“I would be 100% interested in working more with you! You have proven to be an amazing lender”
Sandy C.
Read More
“Absolutely the most knowledgeable, friendly and honest expert I’ve ever worked with!”
Steve R.
Read More
"A pleasure to work with. He was very prompt and courteous with his responses and genuinely cares about the clients he works with."
Kevin H.
Read More
"Professional, responsive and honest assistance with the whole refinancing process from beginning to end."
Previous
Next

We help you reach home ownership.

No catch. No hidden fees.

Have you served in the military or your community as a healthcare provider, teacher, or first responder? Are you a member of your local union or work for your city government?

Are you looking to buy a home but don’t know where to start when it comes to finding your best home financing options?

At Hero Home Programs™, our teams are dedicated to helping community heroes like you through the home purchasing process by finding the best grants, rebates, and loans in your area in order to maximize your savings and help you achieve homeownership.

Contact our team today to learn how we can and mortgages can change your life.

Resource Guides

Complete A to Z guides on your home purchase journey.

Learn about the process for getting a home loan

What steps you can take to improve your credit score

Tips and tricks for moving into your new home

Your step-by-step guide for buying a new home

Scroll to Top