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Posted on October 20, 2009 by Charlie Kimball | Posted under Credit
How Divorce Impacts Your Credit Report
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|Whether you're considering a separation or filing for divorce, it's important that you give your credit special attention. Your credit can have a significant impact on your ability to start this new chapter of life with the resources you need. are the things you need to look out for. ||In the event of a divorce, the divorce settlement legally covers things jointly owned. But that doesn't mean everyone in the world knows about it, and the decree's power is only good if creditors know it exists. It is your responsibility to formally notify all three credit bureaus (Experian, Equifax, and TransUnion) right away. They each have a process for filing explanations or information, and you want to have a written notification in your file. If you don't already have one, get a copy of your free credit report and check it for accuracy. ||Now, make sure you understand the differences between joint and individual credit accounts:|Joint accounts - If you have joint accounts, then both you and your spouse are responsible for the debt. Simply agreeing that one person will take over certain payments doesn't change that. Additionally, a divorce agreement that outlines who is responsible for which debt won't release either spouse from responsibility for joint accounts. As far as the creditor is concerned, it granted credit to both of you and you are both responsible for paying the debt. |Individual accounts - These are accounts in your namHere e only. As long as your spouse isn't an authorized user on the card, this is your private account. Especially as you go through a major life transition, it's important to make sure you keep your balances reasonable and pay every payment on time. If you find it difficult to make the minimum payment on one income, contact your creditor immediately and explain the circumstances. Often, creditors are willing to work with you as you make a life transition. |To thwart confusion if years from now both names still appear on the property's mortgage or deed, notify all lenders of the split and ask what kind of formal notification is necessary to properly re-title accounts or assets. Be sure to contact the local recorder of deeds to file any necessary paperwork to amend the title as well. Close any joint credit accounts that have zero balances and notify all creditors, including any bank lines of credit, that you want to block any new charges. ||After the break-up, contact your insurance agent regarding the beneficiary of any policies. Insurance is contractual, and even if you no longer want your ex as the beneficiary, a policy will pay whoever is named the beneficiary. ||Because divorces can take several months, so it's a good idea to use that time to make sure your credit is in the best shape possible. Here are some suggestions and divorce advice from individuals who have gone through this transition:|Make sure you continue making all payments on time so neither spouse's credit suffers. This often requires good communication, which can be tough at this difficult time but is worth it in the long run. |Know where your|credit|stands. Check your credit report and ask your spouse to do the same. Since information on your three national credit reports can differ, it's a good idea to check your Experian, Equifax, and TransUnion reports. |Consider closing joint accounts or accounts for which either spouse is an authorized user. By closing the account, even if you continue paying down the balance, you ensure that neither spouse can add charges to the account. |It's important to note that creditors can't close joint accounts because of a change in marital status, but can do so if asked. However, that account does not necessarily become an individual account. The creditor can require you to reapply for credit as an individual, and determine whether to extend you credit based on your new application. In the case of a mortgage, lenders usually require that you refinance in order to release a spouse from responsibility. Also, check to see if your divorce attorney has placed a lien on your home and released it once his bills are paid. For more on how to protect your credit history, check out "Your Credit Sucks" on RateNerd.com About The Author: Charlie Kimball writes about credit, credit reports, and personal finance for many popular blogs including RateNerd. |
Tags: CREDIT REPORT, CREDIT SCORE, DIVORCE ADVICE, CREDIT REPAIR, CREDIT BUREAU
