Question: N.W. from Edgewood: I’m going through a divorce. Will this affect my credit score?
A:The inherent act of divorce will not impact your credit score, but, yes, it could fluctuate depending on your debt obligations and other aspects of your financial situation.
For instance, let’s say you and your soon-to-be ex owe money on a joint credit card. Even though a judge may rule that your ex is responsible to pay off this debt, your name is still on the account. Therefore, in the eyes of the card issuer, you’re still equally as responsible. So, if your ex doesn’t make payments on time, your credit score will take a hit.
If you’re considering closing a joint credit card – which is likely a good idea – just understand this action also has consequences. Remember, your "credit utilization ratio" accounts for about 30% of your FICO credit score. If you close a card, you’re reducing the amount of available credit at your disposal. So, even if your spending levels remain the same, your credit utilization ratio will increase. This will lower your score for a while.
Here’s The Simply Money Point: We highly recommend monitoring your credit score and your credit report (yes, they’re two different things) as you proceed through your divorce. You can view your credit report for free online at annualcreditreport.com (you can get one free report every 12 months from each of the three credit bureaus, so consider staggering when you access them). This is the easiest way to spot any missed payments, new accounts in your name and potential fraud. You can get your credit score for free at sites like creditkarma.com, credit.com, or, nowadays, through many major credit card issuers (just always be mindful of extra "add-ons" or "monitoring programs" that might charge a fee).