How Michigan Divorce May Impact Your Credit Score
When you are going through a Michigan divorce, at the forefront of your mind are asset division, spousal support, and issues related to minor children. There is also the emotional toll involved with ending your marriage, which may include feelings of depression, anger, and anxiety. You are probably not thinking about how divorce will impact your credit, but this is an issue you need to address. Divorce on its own does not negatively affect your rating with the three major credit bureaus; problems may arise out of issues associated with your divorce, however. You can trust a skilled Michigan divorce lawyer to keep an eye out for potential problems, but some general information can help you understand the implications.
Decrease in Household Income
In a divorce, you are going from two household incomes to one. It is not the case that your credit rating goes down, but your credit limit may be an issue. You just may not be approved for loans in the same amounts as when your incomes were considered together.
Modifications to Your Mortgage
The marital home is one of the major assets in a Michigan divorce case and it is common for one spouse to want to remain in it once the proceedings conclude. It is a mistake to keep the mortgage in both of your names upon divorce, yet it may not be financially feasible for the remaining party to buy out the other. Modifying your mortgage through refinancing, a loan modification, or other arrangement can resolve the issue, but there may be implications for your credit.
Hostile Divorce Proceedings
Unfortunately, it is all too common for divorce proceedings to turn ugly. One party may be tempted to act on revenge, which can cause serious problems for the other. In a short amount of time, you could be on the hook for a shopping spree, new luxury car, or expensive vacation. When these extravagances are funded by a joint credit card or bank account, your credit may take a hit.
With all the stress of a divorce, one party may overlook their obligations to pay a bill or make a mistake regarding who is responsible for paying. Credit bureaus do not take errors into account when reporting negative activity, no matter how honest they may be.
Reduce Your Risk
You are restricted by taking certain actions with respect to marital property while your divorce is pending, but you can protect yourself when the case is final by:
- Closing all joint bank accounts;
- Cancelling all joint credit cards;
- Making sure that all mortgages, car loans, and other lines of credit are in the proper party’s name;
- Changing over all household utilities to the name of the party that will reside there;
- Requesting your credit report and closely monitoring all activity;
- Ensuring you move forward with a positive credit history.
Discuss Credit Implications with a Michigan Divorce Lawyer
There are so many issues involved with a divorce that you may not make your credit a priority. Avoid credit issues by working with the experienced Grand Rapids, MI divorce attorney at the Van Den Heuvel Law Office. To schedule a consultation about your case, please call 616-698-0000 or visit our website.