Ending your marriage will not impact your credit score on its own. However, the events associated with getting a divorce will likely result in changes to both your score and your creditworthiness. These events may include incurring additional debt, a reduction in household income and other variables that may make it harder to get a credit card or buy a New York home.
It’s possible that your score will go up
If you stayed at home while married, reentering the workforce provides you with an opportunity to earn income that can be used to pay down bills incurred before the end of your marriage. As your debt-to-income ratio goes down, your credit score will likely go up. Paying down credit card balances can result in a decrease in your credit utilization rate, which is another important factor when calculating credit scores.
Alimony doesn’t count as income n
It’s important to note that alimony is not considered income. Therefore, your DTI ration may remain artificially inflated even if you don’t spend a lot of money each month. A lack of qualifying income may scare lenders away even if these payments are enough to cover the cost of a mortgage, car loan or other types of consumer debts. If you are making alimony payments, it’s important to remember that they do not qualify as a tax write-off as they are not income to the recipient.
A divorce may have both short and long-term impacts on your credit score and creditworthiness. Reviewing your credit report prior to ending your marriage may help you determine how the end of your marriage may impact your finances. Taking this step may also help you determine if you are entitled to alimony, child support or other assistance from your former spouse.