A divorce is likely to have an impact on your financial obligations and even your credit scores may be affected. Divorce mediation experts with knowledge of the post-divorce financial aspects say that nearly 50% of the people find that their credit score has gone down after divorce.
Therefore, an experienced mediator will encourage both spouses to arrive at fair and reasonable financial agreements related to property division, child support and alimony so that their future creditworthiness is preserved as best as possible.
Missing on Debt Payments Affects Credit Score
While you are undergoing an emotionally or mentally stressful phase during the divorce, it is easy to forget paying your car loan installment or a credit card bill. A dedicated divorce mediation expert will advise couples to prioritize their debt obligations so that their credit score is not adversely affected.
In case of joint debts (when couples have a joint mortgage or joint credit cards), at the time of divorce settlement, the mediator will help both parties decide who will be responsible for paying specific debt obligations. Moreover, it’s critical to remember that even your ex-spouse accepts to make payments for a certain joint debt, in the creditors’ eyes, you are both responsible for it even after divorce.
Therefore, if your ex misses a joint debt payment, it could still negatively impact your credit score. For this reason, skilled divorce mediators with experience in marital debt division matters advise both parties to remain conscious of what’s on their credit report even after divorce.
Closing Joint Credit Cards During or After a Divorce
At the time of divorce, most couples are likely to decide against the idea of maintaining joint credit cards after they split. However, a knowledgeable divorce mediator will advise both parties to consider how the closing of their joint credit cards may affect their credit score. In many cases, the credit score of one or both spouses may be lowered because closing credit cards adversely impacts the credit utilization ratio.
Irrespective of your marital status, closing a credit card means that you are lowering your total amount of available credit. When the amount of credit you are using remains unchanged, it will naturally increase your credit utilization ratio once you lower your total credit availability. A higher credit utilization ratio can contribute to a lower credit score.
It is also possible that during marriage you were named as an authorized user on your spouse’s credit card. (Authorized users are additional card holders on another person’s credit card account.) After divorce, if your name as an authorized user is removed from your ex-spouse’s credit card, it might impact your credit utilization ratio, resulting in a lower credit score.
It Helps to Have a Divorce Mediator with Experience in Financial Matters
When you are getting a divorce, a lot is going on from an emotional perspective. But it is the time to remain financially prudent and consider the financial effects of your decisions and their impact on your credit score.
At Advanced Mediation Solutions, we have the knowledge and experience to help divorcing couples understand their respective financial positions, and arrive at solutions that preserve their future financial security and creditworthiness as far as possible. To request your complimentary consultation with us, call us at 856-669-7172 or reach us online.