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How Divorce Impacts Credit Scores in New Jersey

Going through a divorce is one of the most difficult things you will encounter in life. However, it does not have to turn your world upside down. Many are under the impression that a divorce will directly impact your credit. There is no direct correlation to a lower credit score because of a divorce. There is, however, an indirect impact that finalizing a divorce will have on your credit report.

What Appears on a Credit Report?

The good thing is that your credit report does not have information on it about your marital status. So, the credit bureaus have no idea if you are married, single, or divorced at any point of your life. Despite this, the way joint financial accounts are handled after a divorce will be reflected on your credit report.

Jointly held financial accounts will not be removed from your credit report. This means that if your name or your spouse’s name remains on a joint account even after the divorce is finalized, both of you will still be legally responsible for it. Until your name is removed from the account, or it is closed altogether, it will show up on your credit report.

Do you have questions about how finances are handled when going through a divorce? Call the New Jersey divorce and family law attorneys at Zeigler Law Group, LLC Group about your situation.

Late Payments Impact Credit Scores

The divorce decree does not end any agreements in place with lenders. So, if your former spouse is responsible for paying the debt on a particular account and fails to do so, the late payments will show up on both of your credit reports if both names are still on the account. Late payments negatively impact credit scores even if you are divorced and aren’t directly responsible for making the monthly payments on the account.

Divorce Can Have a Bigger Impact on the Woman’s Credit Report

Even though it is illegal for credit reporting bureaus to have two different systems for determining credit scores based on genders, a divorce can still have a negative impact on the woman’s credit report. The Equal Credit Opportunity Act (ECOA) is what prevents separate systems based on gender.

Women historically earn less than men even in full-time roles. According to the Bureau of Labor Statistics, the full-time weekly wage for men in the fourth quarter of 2018 was $991. For women, it was $796, almost $200 less than men. 

Experian conducted a survey regarding divorce and its impact on a person’s credit report/score. Experian found that 54% of divorced women reported that their credit scores decreased while they were married. Close to 50% of the women who participated in the survey claimed that their ex destroyed their credit. By comparison, roughly 50% of men surveyed said that their credit score went down because of a divorce.

Divorce has can have an indirect negative impact on your credit report/score for many different reasons. Let the experienced divorce attorneys at Zeigler Law Group, LLC Group help you navigate the rough waters of divorce.

Protecting Your Credit During a New Jersey Divorce

It is possible to protect your credit score during a divorce even though the actual divorce decree will not impact your scores. Be sure to do the following:

  • Close all joint accounts, including credit cards, checking and savings accounts.
  • Remove your spouse from all credit cards held solely in your name if they are an authorized user.
  • Find common ground for other joint accounts, such as a mortgage or car loan (typically it is best to sell these items, split the proceeds and buy or rent a new property or lease a new vehicle).
  • Open a checking or savings account in your own name.
  • Check your credit reports from all the reporting bureaus to ensure that there are no mistakes on them.

Freeze Your Credit

You are permitted to put a freeze on your credit. This prevents credit bureaus from running checks on your credit score, which is often done when you apply for a mortgage, loan, new credit card or any other type of credit.

Putting a freeze on your credit protects you from your former spouse trying to negatively impact your credit score by opening accounts in your name. They still have all of your personal information, so depending on your personal situation, it may be important to put a freeze on your credit. You will be able to end the freeze at your discretion so you can apply for a loan or new credit card account when necessary.

Call An Experienced New Jersey Family Law Attorney Today

When the time comes to file for divorce, you need an experienced, trusted family law attorney on your side. Call the office of Zeigler Law Group, LLC at 732-361-4827, or complete our contact form to schedule a consultation today. We are committed to securing a bright future for the clients and families we serve, through guided insight and zealous advocacy. Let Zeigler Law Group, LLC fight to protect what you deserve. We serve the entire state with office locations across New Jersey.

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Sonya K, Zeigler, Esq. and her team have a well-earned reputation for committed and fierce legal representation. Our firm is here to provide you with the best possible guidance. Call Zeigler Law Group, LLC, at 732-361-4827 or contact us online to schedule a free consultation. Located in Tom’s River, Red Bank, Princeton, and Mount Laurel, New Jersey, we serve clients throughout the surrounding areas.

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