To handle divorce for loan approval, ensure legal separation documents are updated, clarify property and debt ownership, and confirm the ex-spouse is removed as a co-signer or joint borrower. Consult a financial advisor and lawyer to restructure loans, refinance under one party’s name, or apply for new loans independently. Maintain clear communication with lenders about post-divorce financial responsibilities.

Divorce can impact loan approval due to credit history complications, joint account liabilities, and property division disputes. Lenders review credit reports, loan agreements, and ownership documents to assess risk. After divorce, 60% of borrowers face delays or denials if ex-spouses remain on loans, per FICO data. A 2022 study by the American Bankers Association found 45% of divorced individuals did not update mortgage or auto loan agreements, leading to 30% higher default risks. Additionally, 40% of lenders require proof of independent creditworthiness post-divorce, as joint accounts may reflect outdated or shared financial behavior. Proper legal and financial restructuring mitigates these risks by ensuring clear ownership, updated credit profiles, and adherence to lender requirements. Timely action prevents credit score drops and ensures loan eligibility post-separation.