When going through a divorce in Maryland, everything you acquired or earned while married is up for an equitable split. In fact, some of your assets that you might think are separate could be divided. On top of that, the court can ask you to pay child and spousal maintenance. All of these factors will affect your credit in one way or another.
How divorce impacts your credit score
Your credit report in Maryland doesn’t usually report if you are single, married, or divorced; as such, changing your relationship status will not directly impact your score. However, since your assets were combined during the marriage, for example, if you had joint accounts with your ex-spouse or if they were an authorized user on your credit card, their credit behavior could have impacted your score. So, when you divorce and those accounts are no longer reported on your credit report, you might see a small dip in your score.
Additionally, during the divorce process itself, there might be times when bills go unpaid. If you have any jointly held accounts with your spouse and either of you doesn’t make the payments on time, it will show up as negative marks on both of your credit reports. Any collection accounts that are reported will also damage both of your scores. Hence, even if the divorce decree says that one party is responsible for a certain debt that is in both of your names, late payments will still affect both of your credit scores.
Child support is also another factor that can impact your credit score. If you are behind on your payments, the state has a program called “Support Enforcement,” which can take action against you like garnishing your wages, intercepting your state and federal tax refunds, and even suspending your professional licenses.
Protecting your credit score in a divorce
Protecting your credit score can start as early as creating a prenuptial or postnuptial agreement immediately after your wedding. If divorce is imminent or the process has begun, some actions you could take include:
• Closing your joint accounts immediately
• Notifying creditors about your divorce
• Putting a freeze on your credit files
• Avoiding spending binges
Divorce in Maryland is a financially challenging time. But you can still protect yourself to ensure an easier start in your new life.