If you’re going through a divorce, your credit rating if probably the last thing on your mind. After all, your marital status does not appear on your credit report, so a divorce can’t hurt your financial rating, right? Unfortunately, it isn’t that simple. If you don’t pay attention to some of the details about your credit while the divorce is in progress as well as when it is finalized, you may be in for a nasty surprise.
First, get a copy of your credit report as soon as you know you’re getting a divorce. Make sure the information is accurate; if it’s not, correct mistakes quickly by working with credit agencies and creditors. Create an accurate list of all your bills, including the contact information for the lender, balances due, payoff dates, and owner of each account.
Second, take stock of any joint accounts or loans. Lenders still expect loans to be paid, no matter who assumes or is given responsibility for a bill. Work with your spouse to pay off and close joint accounts. If that isn’t possible, try to decide who will take over which accounts as sole owner. Follow up with creditors to bring them up to date about these kinds of changes. It may be to your advantage to work with an attorney to help take the emotion out of the process if necessary.
If the person responsible for the loan defaults or even misses payments, the lender will pursue both parties, even after the divorce. This can affect everyone’s credit ratings even many years after the divorce, much to the surprise of the spouse has moved on with their life, believing all that was settled.
After the divorce is final, check your credit report again and do it periodically over time. Make sure the changes outlined by the judge are shown correctly; if not, contact the lenders right away. Over time, it’s important to monitor the report so that you’re not caught off guard by an ex-spouse getting behind or missing payments.
If you do notice a discrepancy, there are avenues to follow to alert credit agencies. Put the facts in writing, including the specific debt; state why you are disputing the debt; and ask that the information be corrected or deleted. Notify the creditor as well as the agency so everyone has accurate information. Send copies (not originals) of receipts, contracts, and any other supporting paperwork. The agency will conduct an investigation based on your dispute, and they are required to keep you informed. Even if the outcome is not what you hoped, you can ask for a note to be inserted in your report stating that you have disputed the charge.
In addition to remaining vigilant, you can take proactive steps to build new credit in your own name. Some financial institutions offer secured credit cards for those attempting to show they are responsible. Even though divorce is an emotional, upsetting time, it is important to make payments on time as you try to build a strong credit rating on your own.
A change in marital status does not reflect on your creditworthiness by itself. A history of responsible behavior both during and after the divorce, however, will make a difference. By keeping on top of your financial status throughout the process and working together, you can both move forward in building new lives.
Sources:
https://www.lexingtonlaw.com/bad-credit/fixing-your-credit-after-divorce
