If you have ever applied for a mortgage or financed a car, you know how important it is to have a good credit score. After all, according to Equifax, a major credit bureau, those with credit scores between 740 and 850 often receive low-interest rates and other valuable perks.
By itself, your divorce should have no effect on your credit score. Still, there are certain divorce-related issues that may cause your score to plummet.
Mishandling joint accounts
You and your soon-to-be ex-spouse probably have at least one joint credit card. If you do not remove your name from the account, you may continue to be responsible for it. Then, if your spouse misses future payments, your credit score may drop. Consequently, you should be sure to address all joint accounts during your divorce.
Using too much credit
Your divorce is likely to bring about some major life changes. While it may be tempting to reach for your credit cards to pay for new furniture or other items, you do not want to use too much of your available credit. To protect yourself, it is advisable to keep your debt-to-credit ratio at or below 30%.
Becoming a victim of financial fraud
If your marriage has been acrimonious, you may not be able to trust your spouse to protect your financial interests. For example, in the lead-up to your divorce, your husband or wife may open new credit accounts in your name. Because this may adversely affect your personal creditworthiness, you may want to think about freezing your credit report for a few months.
Ultimately, even though you have a great deal on your plate, keeping a close eye on your credit score helps you emerge from your divorce in a healthy financial place.