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Divorce can impact credit rating

Texas couples most likely know that divorce can lead to a heavy emotional and financial burden. For example, finances may be strained as exes adjust to living with only one income in the household. Considering how much income and property ownership can change, it's not surprising that divorce will even affect credit ratings.

A spouse's credit rating isn't likely to drop the minute they file for divorce. However, the actions they take during the asset division process could have a major impact. For example, if an ex wants to keep the house, they might have to refinance the property to buy the other spouse out. Doing so may mean more debt, which could eventually impact their credit rating.

Additionally, if couples don't set up new bank and credit card accounts in their own names, one spouse could withdraw funds or charge on joint accounts. This could leave the other spouse equally responsible and with not enough money to pay the debt off, thus impacting their credit rating. Plus, when credit card debt is divided, both spouses could see their credit limits reduced from what they had as a couple. Lower credit limits can also have an effect on a FICO score.

The ramifications could be extensive in high-asset divorces, especially if one spouse makes significantly more money than the other. In such situations, spouses may wish to consult with different divorce lawyers who may be able to advise them on how to protect not only their assets, including real estate holdings and retirement accounts, but also their credit ratings.

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