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Family law issues can impact one's credit score

Most Texas residents who are preparing to divorce are aware that their finances will be affected by the change in family status. What some people are not aware of, however, is that their credit scores will drop during and immediately after divorce. Understanding how to mitigate this decline is an important aspect of planning for one's future, and it is a family law issue that is often overlooked during divorce.

One of the most common ways that a spouse will experience credit damage is due to the choices made by his or her soon-to-be ex. Whether through circumstance or intent, the actions of one spouse can have a great deal of impact on the score of the other. For example, consider a husband and wife who have decided to divorce and share several credit card accounts. If the husband moves into a new apartment, he will likely need to purchase items to furnish and supply that new residence. If he uses a shared credit card to pay for those purchases, he will be driving up the card's balance-to-income ratio, which can result in a decrease in score for both parties listed on the account.

In another example, consider a spouse who is angry over the end of the marriage and is looking to lash out by making excessive purchases on a joint account. While the property division process may force him or her to accept responsibility for those purchases, there is no mechanism in place to ensure that he or she actually pays the credit card bills on time, if at all. If the payments are not made in a timely manner, the credit score of both spouses will decline.

The best way to avoid a divorce-related decrease in one's credit score is to seek a thorough division of financial accounts as soon as possible. Many creditors are willing to work with Texas borrowers to restructure accounts in only one name or to freeze the accounts, if need be. Like so many financial issues, taking a proactive stance on protecting one's credit is the best course of action, especially when facing family law matters.

Source: U.S. News & World Report, "5 Ways Divorce Affects Your Credit", Paul Sisolak, April 14, 2016

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