Why Your Credit Score May Drop Following Divorce



One of the ugly sides of divorce is that it can ruin the creditworthiness of both parties. Not directly though, but because of splitting assets, including bank accounts, your individual credit reports can get a hit.

That said, it is worth noting that a credit report does not capture your marital status; so, a change of the status has zero effect on your credit rating. What you must worry about is your shared financial obligations in the ways outlined below.

1.  Unequal Split of Debt

At the end of divorce proceedings, a decree is issued by the court ordering how both assets and debt are to be split. The order also specifies who is to assume which debt- no matter who applied for the debt in the first place.

Now, let’s say that you get to keep the house and the other person pays the mortgage, if they refuse the obligation, your credit report suffers.

2.  Change of Budget

Typically, when married, your household enjoys two incomes. Once the divorce is final, you’re saddled with a new budget that your individual income might not support.

You may now have to solely clear the remaining balance on your car, a debt that was previously guaranteed by two incomes. The reality is that if you default, your credit score will surely drop.

3.  Sabotage by Your Partner

Sabotage is a real risk when it comes to messy divorces. This is usually the case when both parties have access to the same accounts. To illustrate, if your partner was an authorized user on your credit card, they can choose to max out the card with total disregard for the resulting negative effect on both your credit reports.

4.  Drop of Your Credit Limit

Legally, creditors have the sole discretion of deciding which terms to offer clients during credit application. Further, they can change the terms upon review of the customer’s credit report. So, if your partner was earning more money that led to you getting a high credit limit, separating the accounts changes your creditworthiness.

Subsequently, creditors can decide to lower your allowable limits to reflect your current financial status. With a lower limit, you may have to overutilize or max out your credit line, effectively lowering your credit scores.

How to Protect Your Credit After Divorce

However amicable the divorce proceedings are, it is upon you to keep your credit score high. Keep in mind that payment history and amount owed are the biggest determinants of your credit score, at 35% and 30% respectively.

Downsize your Budget

The change from two incomes to one income can diminish your ability to pay utilities and existing debts. To survive, you need to rebuild life starting by living by your means. Even with alimony going your way, the money may not cover new budget items. This usually affects women more than men due to disproportionate income that see men earning 82.3% more.

Deal with Shared Debt

As earlier noted, creditors are not obligated to honor divorce decrees. Moreover, removing a name from the loan’s contract is nearly impossible. The only option left is to convince your partner to diligently pay the balances to avoid delinquency on your credit report.

Another approach is to sell off properties or assets that are attracting monthly repayments. Ensure that the proceeds go to clearing the debts before sharing the remaining money. Lastly, the person responsible for the debt can refinance the loan in their name which automatically makes them the only debtor.


Your credit score can drop after a divorce due to many factors including the failure by either party to make repayments on shared debts. To mitigate, you need to disentangle your finances and ensure that only the one responsible for the debt, as per the decree, is the solely listed debtor. Further, open new lines of credit, such as a secured credit card under your name to help rebuild your credit.