Credit Repair After Divorce – How To Clean Up Your Credit So You Can Move On With Your Life
Aside from the emotional turmoil engendered by divorce, it also has a potentially disastrous effect on your finances. Your divorce agreement would most likely include the division of your marital debts in accordance to who would be keeping the pieces of property that are undergoing loan payments. You might have to liquidate assets such as homes or vehicles to pay off the loans incurred by these purchases.
Special attention, however, should be given to the handling of joint credit accounts. Oftentimes, the credit records for these joint credit accounts remain mutually shared between you and your ex-spouse no matter who the divorce court appoints to shoulder the payments. Any delinquency in payments would be reported for both of you and would affect both of your credit scores.
You must take steps to close all accounts wherein your ex-spouse is considered an authorized user. Lending institutions are usually amenable to converting joint accounts to individual accounts as long as the specific accounts are re-assigned to the ex-spouse who would be assuming the responsibility for paying the debt. The creditor, however, might require the one shouldering the debt to reapply and re-qualify for credit to initiate this conversion process.
If the divorce agreement has not yet been finalized, it would be prudent for you to insist on including a ‘hold harmless’ clause in your arrangement. This would protect you from being held responsible for the portion of the debts for which the other person is responsible. This arrangement would also ensure that any delinquency on your ex-spouse’s part would not cause damage to you, including your credit rating.
Request for copies of your credit reports from the credit bureaus and assess the report contents for accuracy. You would want to make sure that all previously held joint accounts have been reported as closed and that you have the correct converted individual accounts on your record.
Splitting up your accounts would most likely lead to a depreciation of your debt-to-income ratio and, consequently, cause your credit score to drop. You might need to rebuild your credit reputation under your own name as if you did not have any previous credit history. Consider applying for secured credit cards. These cards are ideal for demonstrating responsible borrower behavior just for the purpose of boosting your credit rating.
