Divorce is rarely just the end of a relationship—it’s also the start of a complex financial reshuffle. And amid the emotional turmoil, what often gets overlooked is the invisible toll it can take on one’s credit health.
In India, where financial lives of spouses are usually intertwined—joint loans, co-owned houses, shared credit cards—it’s no surprise that a separation doesn’t automatically untangle those connections. And unless you act on it, your credit score might carry the scars long after the legal papers are signed.
One big misconception is that divorce frees you from joint financial obligations. It doesn’t.
Banks and NBFCs do not recognise divorce as a valid reason to remove someone from a loan agreement. If you and your ex jointly signed a loan—whether it’s a personal loan, car loan or home loan—you both remain legally responsible until the debt is closed or restructured.
If either party fails to pay on time, it’s a red mark for both. Missed EMIs, delayed payments, or even one partner ghosting on their half of the EMI can increase your debt-to-income ratio and lower your credit score.
Alimony is another financial aspect that brings its own implications. While many assume that paying maintenance eats into their creditworthiness, the reality is slightly more nuanced.
Swapnil Aggarwal, director at VSRK Capital, reportedly believes proper planning makes all the difference. “When managed sensibly, alimony doesn’t necessarily harm credit records. In fact, timely payments reflect financial discipline,” he says as per the report.
And for the receiving partner, it can be an opportunity. “A lump sum, if invested wisely, say in mutual funds, can generate regular income. This improves credit eligibility and stability,” he adds.
So alimony isn’t just an expense—it can either be a red flag or a financial reset, depending on how it’s handled.
It’s not uncommon for Indian couples to share credit cards. But this sharing can turn sour post-separation.
If the primary cardholder forgets to remove the ex-spouse as an authorised user, they run the risk of the card being used—and maxed out. Worse still, if the bill isn’t paid, the primary holder’s credit score takes the hit. Not the ex’s.
This often slips through the cracks, and the damage becomes visible only after a late payment alert or a rejection on a new loan application.
A home may be physically handed over to one party, but unless refinanced, the mortgage remains in both names. This means if the person keeping the house doesn’t keep up with the payments, the other person’s credit gets dragged down too.
This is one of the messiest parts of post-divorce finance, especially in cities where home loans stretch over two decades.
While a divorce decree might settle the legal relationship, it doesn’t end your financial contracts. You need to go a step further:
Get your credit reports: Check reports from all major credit bureaus. Look for any joint debts or accounts still active.
Talk to the bank: A judge’s order won’t make a loan disappear. You need to refinance, restructure, or close it officially.
Unlink cards: Freeze any unused cards that have your ex as an authorised user. Get their name removed.
Set reminders: During the transition, set up auto-pay or EMI alerts so nothing slips through.
Divorce in India often comes with emotional and social challenges—but ignoring your financial health during this period can haunt your future. Your credit score is your passport to borrowing—be it for a car, home, business, or even a credit card upgrade.
It’s perfectly reasonable to prioritise your credit. This isn’t about being selfish—it’s about securing your financial independence.
So, while the relationship may be over, don’t let your finances get stuck in the past. Untangle wisely.
(By arrangement with livemint.com)