Bank Rate: Divorce Negatively Impacts Women’s Credit Scores

Personal finance website Bank Rate recently said that undergoing divorce has the potential to negatively affect women’s credit scores. Michelle Black from Bank Rate cites the United States Census Bureau report which revealed that in 2018, recently divorced women have lower household incomes than recently divorced men.

This is partly because women earn less than what men do. Reports by the Bureau of Labor Statistics shows that in the last quarter of 2018, women had a weekly salary of $796, while men had a weekly salary of $991.

Another way that divorce can negatively impact women’s ratings is their financial standing during the marriage. According to a survey by credit reporting company Experian, women reported that their ratings fell during the marriage. Moreover, 50% of women participants said that their ex-partners ruined their standing.

Black clarifies that going through a separation does not automatically mean that scores will be damaged. This is because marital status is not stated in reports, making the fact of the divorce not directly relevant to scores. Moreover, the Equal Credit Opportunity Act prohibits discrimination of any form.

Blacks mention that divorce can lead to credit issues for both men and women for various reasons. One of the most prominent reasons for this is that creditors do not acknowledge divorce decrees. With this, ex-partners’ failure to pay joint credit obligations will reflect solely on the party whose name appears on the statement.

Moreover, joint accounts are not purged from reports. Similar to decrees, the ex-partners failure to pay their dues will affect the other party’s standing.

Meanwhile, Experian advice married and soon-to-be-divorced individuals to take steps to separate or close joint accounts. The company also reminds concerned individuals to refrain from stopping payments for joint accounts until it is separated or closed.