While working at the law firm I would field calls from consumers asking about how divorce would affect their credit score. In my opinion probably the quickest event to drop someone’s credit score is to go through a divorce. Here are a few major reasons divorce affects your credit score.
- Loss of income -Right now there are many couples where both work. Upon divorce your join income is halved or worse while you may have an increase in debt.
- Increase of debt – You may have to hire an attorney to help mediate the divorce or represent you in court. Also might have to get a new place to live and mode of transportation.
- Responsibility of debts – This is by far and wide the largest reason people have bad credit after debt and let me explain why. You have opened joint accounts and therefore both of you are responsible for the debt. Now even though when you divorce you might divide up the assets through agreement, if say for example your ex-wife starts to avoid paying the car and it is repossessed you will be contacted about paying off the debt and also have the derogatory listing put on your report.
This last major reason was a huge complaint that I would receive from consumers. The judge ruled that I didn’t have responsibility for that car. Well unfortunately until some things change lenders will still consider you responsible for those debts. Is it fair? I would argue no it’s not but until enough people create a stir then it will remain the status quo. Just be careful if you are going through a divorce as this could cost you immensely in the long run.