Divorce often means major financial changes. You might have to close or suspend old accounts, open new lines of credit and even split the same amount of income across two households. There’s little question that the financial demands of divorce can lead to a drop in your credit score.
The possible negative impact of a divorce on your finances is obvious. However, your financial circumstances can also impact what happens in the divorce, especially if you don’t act to minimize the impact on your credit score.
Your current employment status and creditworthiness could actually play a role in the outcome of your upcoming divorce proceedings.
You may not be able to keep assets that you cannot afford to finance
Assets that you have purchased on credit during your marriage may require some effort to retain after a divorce. Even those possessions you previously paid off may require financing for you to split their value with your ex.
You may need to refinance your house or your vehicle as part of the divorce process. If you can’t qualify for a mortgage on your own, then that could affect how the courts decide to divide your property or the settlement that you and your ex reach.
Especially if you have to use some of the equity established in a home or vehicle to pay your spouse their share of the asset value, you may not be able to obtain financing if you don’t have a job or you have a low credit score.
Being realistic about what assets you can afford and also how much of the marital debt you can manage will help you negotiate a property division settlement in an upcoming divorce or advocate for yourself during contested court proceedings.