Divorce causes a lot of upsets in someone’s life — but some are more troublesome than others.
Your credit can be significantly affected when you divorce — and this is particularly true for women rather than men. There are a few reasons why this may be the case.
How the division of debts can affect your credit
When couples divorce, they often enter into a property division agreement to divide both assets and debts. One complication arises because credit card companies (and other creditors) don’t have to abide by any settlement agreement or divorce decree that you and your spouse reach. Instead, they can continue collection efforts among both of you, no matter who agreed to pay what when you two settled your divorce.
If your ex-spouse agreed to repay certain debts as part of your divorce settlement and fails to do so, that could damage your credit, as well. You could also be subject to collection action.
Why divorce can affect women’s credit more than men’s
U.S. Census Bureau data indicates that women tend to have less overall income following their divorces. Typically, that’s because women are paid less than men, and they may have sidelined their careers to take care of the home and children while married.
When overlayed with data compiled by the credit bureau Experian, it makes sense why at least 54% of the divorced women they polled reported decreases in their credit scores after their divorce. At least 50% of the respondents attributed their credit woes to their ex-husbands.
Many divorcing spouses have the false impression that there’s no way to avoid the sometimes devastating consequences of a divorce on their finances. This isn’t necessarily the case. You can negotiate a private settlement with your ex that will be more effective in protecting your financial interests and your future.