When it comes to divorce, few matters can elicit an argument quite like money can. Yet it is one of the issues that couples often overlook or underestimate the impact of prior to starting the process. Further, many couples fail to consider how the financial issues in divorce may ultimately impact their credit. Do not let this happen to you! Learn how to reduce the havoc that divorce may wreak on your credit and financial future with help from the following.
Understand the Risks
Experian, one of the three national credit bureaus, recently inquired couples on the financial impact of divorce. What they found was an average financial loss of about $20,000. That was not all Experian discovered, though. Among those that responded to the inquiry, nearly half said their spouse had “ruined” their credit.
The Contributing Issues
While there are likely a number of issues that contributed to the damaged credit-standing and financial losses of surveyed couples, much of it goes back to not knowing about or discussing financial matters prior to the divorce itself. For example, a total of 59 percent respondents said they regretted not being more financially independent prior to their divorce. Further, most disclosed that they had not discussed matters like credit scores, retirement savings, or even long-term financial goals prior to marriage. In fact, only 37 percent knew how much their spouse owed in student loans prior to getting married.
Mitigating Risks Before Divorce
The best way to avoid financial strain and credit destruction prior to divorce is to ensure you talk about financial matters long before divorce even becomes an issue. Prenuptial and postnuptial agreements are a great way to do this, but they are not the only way that couples can work on full financial disclosure during or before marriage....