If you are considering a divorce, or are in the process of getting one, you may be wondering how it will affect your ability to get a loan. The answer is, unfortunately, that lenders can and often do ask if you are divorced. Here's what you need to know about how your divorce could impact your ability to get a loan.
When applying for a loan, lenders will almost always look at your credit score. This is because your credit score is a good indicator of how likely you are to repay the loan. If you have a high credit score, lenders will see you as low-risk and be more likely to approve your loan application. However, if you have a low credit score, lenders will view you as high-risk and may be less likely to approve your loan application.
One thing that can negatively impact your credit score is having unpaid debts from a previous marriage. If you were married and then divorced, but there were unpaid debts from the marriage (such as joint credit card debt), this can still show up on your credit report and lower your score. Therefore, it's possible that getting divorced could make it more difficult to get approved for a loan since any unpaid debts from the marriage could lower your credit score.
Another thing that lenders will often look at when considering a loan application is income stability. If you have been employed at the same job for many years, this shows lenders that you have steady income and are less likely to default on the loan payments. However, if you've been through a recent divorce and/or job change, this could make lenders view you as higher risk since there is less evidence of stable income. Therefore, getting divorced could make it more difficult to get approved for certain types of loans such as mortgages or auto loans since lender may perceive you as being higher risk due to lack of income stability following the divorce..