A divorce is as life-changing to both spouses as the marriage was, transforming one household into two and necessitating the division of their marital assets and debts.
Moving forward after a divorce feels overwhelming, with much to consider, including finding new living arrangements, opening separate bank accounts, and even beginning new subscriptions to previously shared services such as streaming services and utilities. One question many divorcing spouses ask is, “How does divorce affect my credit score?”
Divorce Itself Does Not Impact Your Credit
A credit score is personal rather than something shared with a spouse during marriage. Each spouse has their own credit score based on their lines of credit and payment histories. An individual credit score continues after a divorce.
Getting divorced does not directly impact a credit score, meaning you shouldn’t expect your credit score to plummet because you are single. Likewise, don’t expect it to suddenly improve after divorce, even if your spouse has bad credit and you’re now financially free from them.
Although the divorce itself does not affect your credit score, there are circumstances that may arise later that can impact your credit score as a result of the division of your marital debts and the new way you handle your finances. For more information, contact our Denver divorce law firm for a free consultation.
Understanding the Division of Assets and Debts During Divorce In Colorado
Divorce law in Colorado requires the division of marital assets and debts in a way that’s fair and equitable, if not exactly 50/50. Spouses may either negotiate this division themselves with the help of their family attorneys and mediation, or a judge will hear their arguments in court and decide for them.
The marital pool includes all assets and debts accumulated during the marriage, while the spouses retain separate assets and debts that belonged to them before the marriage. Debts incurred by an individual before marriage, such as one spouse’s student loans, remain their own, while debts accrued during the marriage, like credit cards, are divided equally between the spouses.
What Happens When a Spouse Fails to Pay Their Share of the Debts After Divorce?
Although a divorce does not automatically impact the credit score, it’s important to note that a judge assigning a credit card debt to one spouse does not automatically remove the other spouse’s name from the account.
While the non-paying spouse can call the creditor and request that they remove their name, banks and other creditors do not have to honor the court’s judgment. One spouse’s failure to make payments on a debt can negatively affect the other’s credit score if the creditor hasn’t removed their name from the account.
The Financial Impacts of Divorce Can Affect Your Credit Score
Divorce often has a large impact on an individual’s financial situation. Each spouse must now pay for a separate residence and utilities, while they both used to contribute to a shared household. Income and bill-paying routines change after a divorce, leaving each spouse vulnerable to falling behind on their debt payments or allowing something to slip through the cracks.
If you’ve recently been divorced, it’s important to review your household bills and debts to ensure that you’re up to date on all of your accounts. Close all joint accounts, remove your name as an authorized user on accounts assigned to your spouse, and end all shared subscriptions, streaming services, and utilities so you can open new ones in your name alone.
After a divorce, it’s beneficial to track your credit score and promptly address any issues that might arise, such as a spouse not paying toward a debt the judge assigned them while your name remains on the account.
Protecting your credit score as you move forward into your new life helps you begin on the right track.