Estranged Alaska couples who are seeking a divorce can see their finances disrupted. While this is normal, it can also affect your credit score. Women are especially susceptible to this issue; this is why that happens.
How divorce affects credit
Many married couples have joint accounts. Unfortunately, after their divorce, it doesn’t automatically mean these accounts are wiped from your credit report. If your former spouse is the one who amassed debt but doesn’t pay, you are also responsible for it and it will be reflected in your credit score.
Your credit limit can decrease after a divorce. When you no longer have both incomes to rely on, it can lower your limit, which impacts your total credit utilization ratio while using your credit card. You’ll no longer be able to easily spend as much as you did while still married, so this can affect your credit.
In some cases, one person has limited credit history and relied on their spouse’s credit to build their score. However, divorce can undo that work and prevent the individual from qualifying for new credit and loans.
Why divorce hits women harder
Women are more likely to see their credit negatively impacted by divorce. One of the main reasons is that their household income declines more than 40% after a divorce. Unfortunately, women’s incomes are lower than men’s; this is especially true for people of color.
Another factor that affects women’s credit scores is that they are more likely to have to take off time from work to care for their children. This also impacts their household income. The costs associated with divorce also lead to a decrease in financial stability, which can cause financial hardship.
Divorce is difficult enough emotionally, but it may also lead to trouble with your credit. However, over time, you can improve your score and creditworthiness.