After Split, Tips to Protect Personal Credit Rating and Credit Score
For many, a divorce becomes an all-out battle about splitting up assets and dividing finances. It’s essential that as soon as you know you’ll be getting a divorce, you take steps to protect your personal credit rating and credit score.
Start by obtaining copies of your credit report from the three credit reporting agencies (also known as credit bureaus) — Experian, TransUnion, and Equifax. In theory, all three of these credit reports should be identical. However, in reality, you’ll notice subtle differences, based on whether each of your creditors and lenders reports information about you and your payment history to all three bureaus.There are several ways to obtain copies of your credit reports, including:
1. Go to the official Annual Credit Report Web site.
This Web site is operated as a collaboration between the three credit reporting agencies and the Federal Trade Commission. It allows consumers to obtain one free copy of their credit report, from each credit bureau, once every 12 months. (Warning: Beware of imposter Web sites that claim to offer free copies of your credit report, but actually require you to sign up and pay for an ongoing credit monitoring service.)
2. Contact each credit bureau separately to request a free copy of your credit report. You can do this by telephone, online or in writing.
The quickest method is online. The Web sites to visit are: Experian.com, TransUnion.com, and Equifax.com. You can purchase a three-in-one credit report from any of the credit bureaus or from a variety of other companies. These reports contain identical information to what’s listed within the single credit reports issued by each credit bureau, but the information from the three credit bureaus is displayed together in an easy-to-read format within a single report. This makes comparing the information on your three credit reports easier. The charge for a three-in-one credit report is anywhere from $19.95 to $39.95, depending on the service you use.
As you review the information on each credit report, create a list of all joint accounts, including credit cards, store charge cards, car loans, mortgages, and any other types of credit or loans that list both you and your former (or soon to be ex) spouse jointly on the account.Once you have identified all of the joint accounts, immediately take steps to either close those accounts and pay them off in full, or have your name (or your ex-spouse’s name) removed from the account(s), based on who is responsible for paying them off, according to your divorce settlement.
Even if a judge has stated that as part of your divorce settlement, your ex-spouse is completely responsible to pay off specific outstanding loans or credit card debt, for example, as far as the credit bureaus, creditors and lenders are concerned, as long as both names are listed on the account, both people are equally responsible for that debt.
If your ex-spouse is late on a payment, or an account goes into a negative standing, it will impact your credit score and credit history as long as the joint accounts remain intact. This could take months, perhaps years to fix, and will hurt your ability to obtain new credit cards or loans in your own name.
One of the biggest mistakes recently divorced individuals make is assuming their former spouse will close the joint accounts, pay them off in full, or separate the accounts legally. Often, this is not the case and both people wind up damaging their credit rating and seeing a dramatic decrease in their credit score.
