Although the credit bureaus do not consider divorce one of the many factors that contribute to an individual’s creditworthiness, expecting to come through a divorce with your credit unscathed simply isn’t realistic. Your individual financial behavior, the types of debt you and your spouse carry and the amount of joint debt you both owe affects your credit scores long after the divorce is final.
Closing Joint Accounts
It isn’t uncommon for married couples to hold joint accounts. One of the first financial decisions most divorcing couples must make is whether or not to close their joint accounts. While closing a joint bank account doesn’t have a clear credit impact, closing a joint credit card often damages both individuals’ credit scores.
Your credit utilization ratio–the percentage of debt you carry on a credit card as measured against that card’s credit limit–has a significant effect on your credit rating. When you close a joint credit card, you lose the available credit remaining on that card. This increases your credit utilization ratio and, in turn, adversely affects both your credit scores and those of your spouse. Continue reading