Protecting Your Credit
The 4 Steps You Can Start Using, TODAY!
Guide to protecting your credit, learn the latest debt elimination secrets and any legal issue for debt elimination, because while paying off debt, you could hurt your fico and credit scores. learn how to legally get out of debt, Today!
Once you have obtained a good credit score, it is necessary to protect it. If you've recently been through a divorce - or are contemplating one - you may want to look closely at issues involving credit and divorce. Understanding how protecting your credit and the different kinds of credit accounts opened during a marriage may help illuminate the potential benefits - and pitfalls - of divorce and debt.
Be Debt Wise, Divorce And Debt Til Debt Do Us Part!
For most people, the most important indicator of financial health, after employment and income, is their FICO and credit scores.
Credit report with fico score are compiled by the major credit reporting bureaus determine whether they will qualify for home mortgages, auto loans, credit cards and major purchases.
FICO and credit scores may also affect your ability to rent homes or apartments and may influence a prospective employers' decisions on hiring.
Credit and Divorce, Why Protecting Your Credit Now, Is So Important!
Bob and Jane recently divorced. Their divorce decree stated that Bob would pay the balances on their six joint credit card accounts. But three months later, after Bob neglected to pay off these accounts, all six creditors contacted Jane for payment. Jane referred them to the divorce decree, insisting that she was not responsible for the accounts.
The creditors correctly stated that they were not parties to the decree and that Jane was still legally responsible for paying off the couple's joint accounts. She later found out that the late payments appeared on her credit report.
There are two types of credit accounts: individual and joint. You can permit authorized persons to use the account with either. When you apply for credit - whether a charge card or a mortgage loan - you'll be asked to select one type, keep in mind that it is easy when only your name appears on the account.
Protecting Your Credit: Individual Accounts?
Individual Account: Your income, assets, and credit history are considered by the creditor. Whether you are married or single, you alone are responsible for paying off the debt. The account will appear on your credit report, and may appear on the credit report of any authorized user.
However, if you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), then protecting your credit is very important, because you and your spouse may be responsible for debts incurred during the marriage, and the individual debts of one spouse may appear on the credit report of the other.
Advantages/Disadvantages: If you're not employed outside the home, work part-time, or have a low-paying job, it may be difficult to demonstrate a strong financial picture without your spouse's income.
But if you open an account in your name and are responsible, no one can negatively affect your credit record.
Joint Accounts!
Joint Account: Your income, financial assets, and credit report - and your spouse's - are considerations for a joint account. No matter who handles the household bills, you and your spouse are responsible for seeing the debt pay down.
A creditor who reports the credit history of a joint account to credit bureaus must report it in both names (if the account was opened after June 1, 1977).
Advantages/Disadvantages: An application combining the financial resources of two people may present a stronger case to a creditor who is granting a loan or credit card. But because two people applied together for the credit, each is responsible for the debt pay down.
This is true even if a divorce decree assigns separate debt obligations to each spouse. Former spouses who run up bills and don't pay them can hurt their ex-partner's credit report on jointly-held accounts.
Protecting Your Credit: Number Of Account Users.
Protecting your fico and credit scores is easy. If you open an individual account, you may authorize another person to use it. If you name your spouse as the authorized user, a creditor who reports the credit history to a credit bureau must report it in your spouse's name as well as in yours (if the account was opened after June 1, 1977). A creditor also may report the credit history in the name of any other authorized user.
Protecting your credit Advantages/Disadvantages: User accounts often are opened for convenience. They benefit people who might not qualify for credit on their own, such as students or homemakers. While these people may use the account, you - not they - are contractually liable for the debt pay down.
Protecting Your Credit, Divorce And Debt Guide!
If you're considering divorce or separation, pay special attention to the status of your credit accounts. If you maintain joint accounts during this time, it's important to make regular payments so your credit report won't suffer.
As long as there's an outstanding balance on a joint account, you and your spouse are responsible for it, start guarding your credit now!
If you divorce, you may want to close joint accounts or accounts in which your former spouse was an authorized user. Or ask the creditor to convert these accounts to individual accounts.
Protecting Your Credit By law, a creditor cannot close a joint account because of a change in marital status, but can do so at the request of either spouse. A creditor, however, does not have to change joint accounts to individual accounts.
The creditor can require you to reapply for credit on an individual basis and then, based on your new application, extend or deny you credit. In the case of a mortgage or home equity loan, a lender is likely to require refinancing to remove a spouse from the obligation.
Protecting Your Credit: Before You Divorce!
Here are a few simple suggestions:
- Decide how to divide or dispose of property. If necessary, you can use a mediator to work through this with your former spouse.
- Close or separate joint accounts. Decide with your former spouse who will be responsible for paying bills, and notify your creditors of your divorce.
- Establish independent credit, if you do not already have it.
- Make sure bills are paid.
Even if your former spouse is ordered by the court to pay debts from the marriage, you can become liable if they are not paid.
Let's face it, aside from its non-financial effects, divorce can cause problems with your credit record. The end of a marriage does not erase the debts you and your former spouse took on as a couple.
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