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Will Divorce Ruin Your Credit in California?

Anyone facing a divorce likely has questions about what the divorce will mean for the rest of his or her life. Divorce can affect virtually every aspect of an individual’s life, from living arrangements to quality of life and time available to spend with children. It can also have a significant economic impact, and many people facing divorce wonder how divorce can impact their creditworthiness.

Divorce and Credit in California

Divorce does not directly affect your credit; lenders do not typically use marital status as a factor for consideration when assessing a borrower’s creditworthiness. Your credit score may not directly hinge on your marital status, and a divorce will not directly affect credit, but divorce can hurt your credit in indirect ways.

  • If you and your ex decide to keep a joint credit card and pay it off together, you must come to a mutually agreeable solution for handling the outstanding balance. If your ex does not make his or her required payments on a joint credit account on time, this will certainly drive down your credit score.
  • If you and your ex share any joint bills after the divorce, failure to pay on time can damage your credit. If you pay jointly on unsecured bills or secured bills with assets that belong to you, there may be little incentive for your ex to pay those bills on time, especially if he or she is unconcerned about his or her creditworthiness.
  • Divorce can be expensive, and after a divorce the divorced spouses will need to essentially rebuild their lives as single people. A divorced spouse who earned less than his or her ex may struggle to pay bills in full and on time or simply forget to pay some bills, eventually damaging his or her credit.
  • Vindictive spouses with access to their exes’ credit accounts as authorized users may intentionally rack up debt on an ex’s account with no intention of repaying any money spent.

These are just a few ways divorce can potentially harm your credit. It is essential for anyone expecting to divorce in the near future to take appropriate steps to prevent these issues, although some may be more difficult to address than others.

Protecting Your Credit in Divorce

If you have any reason to suspect your soon-to-be ex will try and take advantage of joint credit accounts or engage in other financially disruptive activities like racking up debt in your name, you can take a few relatively simple steps to prevent these issues and find greater financial security after divorce.

The first thing any divorcing person should do is a full assessment of the couple’s shared accounts and credit. Divorce proceedings typically involve a division of property and debts, and the judge overseeing a divorce case will likely assign an equal share of both to each spouse. However, this does not guarantee your ex will pay his or her fair share on time. Staying on top of payments and ensuring they are paid on time is paramount, even if it means paying in place of your ex. Once you settle the outstanding balance, you can close the account and move on.

Credit monitoring services can be very helpful as they can alert you to late or missed payments. However, these alerts will not take effect until the payment has already been missed. Luckily, missed payments do not reach the credit bureaus until they are 30 days late, so you have some time to settle outstanding payments before they influence your credit.

Ultimately, the ideal situation is for a divorcing couple to settle their shared accounts and split entirely from all financial entanglements. This may involve one spouse essentially buying out the other spouse’s share of joint accounts and/or property to ensure an equitable division.