Don’t Let Divorce Ruin Your Credit Score
Act to Protect Your Credit Report
Divorce is unpleasant enough without having to experience a huge drop in your credit score. While you may be more interested in your property and investments than in your credit report, creditors have no interest in how you and your spouse dispose of your belongings; they are only interested in your credit bureau report and your credit score.
Why is this information so important to you? Well if you and your spouse opened credit accounts, including credit cards, auto loans and mortgages jointly, you are both responsible for paying them back. Before you reply, “but the Judge ordered my spouse to pay that account”, just remember, creditors are not legally bound to follow the orders set forth in your final divorce decree. A judge’s order does not override what you owe your creditors and most attorneys don’t advise their clients of the potential for problems if one spouse does not follow the court order. Here are a few strategies to prevent the dissolution of your marriage from crumbling your credit score.
Close joint accounts. If it is possible, close all joint accounts before the divorce proceedings. This will keep an angry spouse from continuing to use the account and adding new charges that you may later be held responsible for.
Open separate or individual accounts. Turn all joint credit cards, gas cards and any retail accounts into individual accounts. The added benefit of doing this is that it will mean you won’t have to re-establish credit in your own name after the divorce since the new accounts will be opened using your present credit score and bureau report.
Settle with creditors. Try to settle existing accounts for an amount less than you owe. Some creditors will be receptive to this option to protect their money when they become aware of a potential divorce. Too many creditors have been burned trying to collect from angry spouses. If you do this, be certain to get a letter from the creditor that the account has been paid in full and a written promise that they will not file anything derogatory about the account to the credit reporting bureaus.
Freeze accounts. This will keep you and your spouse from being able to use the account and running up the balance. Once the divorce is final, the balance due can be transferred to the party charged with repaying it in the divorce decree.
Contact your creditors. Inform them that you are in the process of a divorce. If there is a change of address, make sure they know it so that you will continue to receive bills from all joint accounts.
Make sure all bills are being paid. A divorce is not quick when there is substantial money, property or children involved. During the long process it is easy to miss a payment and all it takes is one late payment to hurt your credit. If your spouse won’t pay, make a minimum payment even if you know that your spouse will ultimately be responsible. Preserving your credit is more important than standing on ceremony.
After the divorce check your credit report and credit score. Obtain your credit report and score immediately after the divorce. Look for any unusual activity, new accounts you did not authorize or an increase in debt you did not create. If you do observe any of these events and you suspect that your spouse is responsible, consult your attorney. Do this every 3 months for the next year.
Take action to correct errors and unauthorized activity on your credit report. Either contact your credit reporting bureau directly or retain a professional credit repair company and challenge the activity that you did not authorize. Have the erroneous information removed if possible. If you do decide to use the services of a credit repair organization, make certain that they follow all of the laws for credit repair including those provided by the federal Credit Repair Organization Act (“CROA”).
Get credit repair company has helped thousands of consumers across the nation to repair their credit reports. For more information about their programs, call 1-800-665-9981. They can also be found on the web at http://www.getcreditrepair.org.
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