Credit is highly important in our society. Our economy runs on credit, and with good credit you are much more likely to be able to get a mortgage loan, student loan, car loan and many other types of financial aid. But major life events can have a huge impact on your credit ”“ and divorce is one of those. Here are just a few ways a divorce can crash your credit:
- Divorce expenses. Divorce can be expensive, and many people will decide to use credit cards to either pay off those divorce expenses directly, or to cover other life essentials that they would normally use their cash for. When they do this, it increases their credit card utilization, and too much credit card utilization can result in a hit to your credit.
- Failure to make payments. You may find that during divorce, you have a harder time paying off your financial obligations such as your car payment, your utility bills or your mortgage. This can be due to the aforementioned divorce expenses, or simply because without the dual income afforded by marriage, you are struggling with your financial obligations. Additionally, you probably share several accounts with your soon-to-be-ex. Divorce doesn’t stop you from having to pay debts on these joint accounts, and if your spouse fails to make payments, it will hurt your credit.
- On the note of shared accounts ”“ if you share things like credit cards and your spouse gets wind that a divorce might be on the horizon, your spouse might take measures to utilize those joint cards to rack up debt. It could be a vindictive response to intentionally harm you, or it could just be your spouse’s way of looking out for number one. Get yourself separated from those accounts as soon as possible.
Our Denver divorce law attorneys can help you get your finances in order during a divorce to protect your credit.