How Divorce Impacts Your Credit
by: Michael Creditfirm.
Don’t Neglect Your Credit During A Divorce
Although divorce procedures do not directly impact your credit, the indirect impact can quickly devastate your credit scores in no time at all.
Things such as child support, joint accounts, and joint liability all of a sudden enter the fold. And with extra responsibility, comes a greater risk of default.
But, have no fear, there are steps you can take to protect your credit during a divorce.
Get Your Credit Report
It is absolutely crucial that you are aware of every account that is reporting to your credit report. Joint account holders and co-borrowers have 100% liability in just about every case. Get a copy of your credit report from all 3 credit bureaus, have a seat and go through every open account in your credit file. Make a list, and give it to your attorney.
A divorce decree does not relieve your liability in any joint accounts which you incurred with your spouse. You are 100% liable and 100% responsible for ALL joint accounts even if the court decrees otherwise.
That’s right, even if the court decrees that your spouse is 100% responsible for a certain debt, you are still liable to the creditor in case of default. A divorce decree does not nullify a signed debt obligation. Whether it’s a credit card, auto loan, or mortgage, if your name is on the original contract, you ARE 100% liable for the debt. This means that if your spouse fails to make a payment or defaults on the loan, it will be reflected in your credit report. Plus, the credit grantor has a legal right to take legal action against both you and your spouse.
So what do you do to protect yourself?
- Close or separate all joint accounts. Talk to your ex-spouse, if possible. Go through all your debt and decide who should be responsible for each and every account. Call your creditors and ask them how to transfer your joint accounts to individual accounts. If your spouse decides to be less than cooperative, paying off the debt and closing the accounts may be your best bet.
- You may have to refinance your home to get one name off the mortgage, or you might need to sell your home and divide the proceeds. Even if your name is removed from the title or deed, if your name is on the mortgage, you are responsible for the loan.
- Continue to pay ALL bills on time.
- DO NOT LISTEN TO YOUR RELATIVES who tell you to run up your spouses debt and stop paying the bills because it’s the other person’s problem. You have just as much liability in the accounts as your spouse, so you will be ruining both your credit scores, which you will need in order to start over.
If you were left with few to no open and active accounts after the divorce, you will need to begin to re-establish credit. A good way to start is by getting a credit card with a small credit limit. Pay your bills on time, keep you balance low, and your credit score will increase. If getting approved for a credit card becomes problematic, consider applying for a secured credit card in order to re-establish credit.
If Divorce left your Credit in Shambles
Consider hiring a credit repair service to help you move forward and get your life back together.
CreditFirm.net has helped thousands of our clients get their credit back on track and start fresh with an improved credit report and score. So why wait, get started today and be one step closer to better credit.
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