Maintaining a good credit score is important for anyone to be able to secure a loan or credit card on convenient terms and conditions. It is normal for married couples to run a joint bank account and credit card.
But what happens to these cards and accounts in case of divorce? Oftentimes, these accounts are not settled, thus impacting your credit score.
So, do divorces lead to an impact on credit score? Not directly but these can lead to situations where credit score becomes a casualty.
These could be four such scenarios:
Joint bank accounts stay joint until they are closed: Once divorce takes place, especially in cases where both names are on a loan (such as a personal loan, or credit card), both the partners remain legally accountable. If your ex partner happens to miss a payment, your credit score can suffer.
Due to financial stress: Divorce often results in legal fees, living separately, and splitting of incomes. This can lead to decline in income, and thereby missed EMIs or bill payments.
Credit contracts: It is surprising but true that even if a court tells one partner to clear debt, the bank is still authorised to make the one who signed the loan accountable. So, if your name’s on the loan, you can be made responsible.
Long-standing accounts: If you happen to close joint accounts or credit cards, it may squeeze your credit history or reduce your credit utilisation ratio—both of which have an impact on your credit score.
Disclaimer: Mint has a tie-up with fintechs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
