Your marital status doesn’t play any role in calculating your credit score – so why could a divorce harm your credit score? Joint accounts are the reason.
Most couples have joint debt like mortgages, credit cards, and loans. A divorce decree may assign responsibility for a joint debt, but the decree doesn’t affect the lender’s contract. If the responsible party doesn’t pay, the late payment registers on the credit reports of both former spouses.
Even if your divorce is amicable, confusion about joint debts can harm your credit score – and a vengeful soon-to-be-ex can really create financial chaos.
How do you avoid this chaos? Take preventative action to separate your joint accounts before the divorce is finalized.
Apply for your own card before closing your joint accounts. If you close all your accounts first, the temporary credit score drop may hurt your qualifications for a new credit card.