My “Ex” ruined my credit!
Are you going through divorce and feeling overwhelmed with the process? Are you feeling a little anxious because you don’t know where to start with protecting your credit and you don’t want it ruined because of your divorce?
Here are 3 things you should know to protect your credit.
Hi – I’m Emily Cressey with HomeProAssociates here at HomeSmart Real Estate in Seattle, WA and I’ve worked with so many distressed home owners who were worried about how they could sell their houses and not have it negatively impact their credit.
Unfortunately, going through a major life event like a divorce can really wreak havock on your credit score because your income and expenses can both change drastically and suddenly. Even if you’re selling your house now, you may want to buy another house in the future and it will help if you take a few precautionary steps DURING the divoce to protect your credit.
Yes, that’s right, the time to protect your credit is during your divorce NOT after the dust has settled.
Here are 3 major things that you need to know or do about your credit to protect it during your divorce:
1. The first thing you should know about credit is that Creditors do not honor divorce decrees. This is an important fact and probably the number one reason people give me for bad credit. They think that because their divorce decree states that their “Ex” is responsible for a specific account, they have to pay it, and if they don’t, it’s on them.
The frightening reality is, if your ex-spouse makes a late payment on that credit card or car payment account that’s in both your names, it will still reflect badly on YOUR credit. Even if your divorce decree states that your Ex is responsible, the lender/creditor on that account didn’t agree to it and didn’t formally let you off the hook.. Your lender will still expect both of you to pay back the money you borrowed, plus interest, as you initially agreed and will report the account history appropriately.
2. The second thing you should know is that Joint accounts will stay on your credit report until they are paid off or closed. When going through a divorce, you will want to understand the difference between being an “account holder” and being an “authorized user.”
If the account you have opened is JOINT, then both you and your spouse are financially responsible for the account. If you are an AUTHORIZED USER, you have the ability to use the account, but are NOT financially OBLIGATED to pay it. Lastly, if you are the primary account holder, you are responsible for the account. Understanding this will help you in the future regardless of what your divorce decree states.
What can you do here? It is in your best interest to obtain a copy of your credit reports and contact every creditor that is appearing on your reports. Find out if the account is joint, you are the account holder or if you are an authorized user. CLOSE joint credit cards and remove your ex as an authorized user from any credit cards which are open in your name only.
3. The third thing you should do to protect your credit is to keep in communication with your creditors. Make sure that all of the creditors that are reporting to the 3 credit bureaus have your updated address and you are getting monthly statements on all your bills. You will want to have a discussion with them about removing an Ex from any and all accounts so they don’t incur any bills which you may ultimately have to pay.
You may also want to freeze your credit reports with all three credit reporting agencies to prevent a vindictive ex-spouse from opening fraudulent accounts in your name.. Understanding these three items will give you a better opportunity to save your credit from damage by late payments or increased debt (in your name) that you didn’t authorize or even know about.
Are You Going Through A Divorce Or Separation?
Going through a divorce or separation in Seattle, WA can be a difficult and emotional process. Many times people want to keep the details private from their friends and families. Your realtor buddy may not be the best person to work with at this time, especially if your spouse does not view them as a neutral third party. If you need to discuss these items further, please feel free to call, text, or email me. Again, this is Emily Cressey with HomePro Associates at HomeSmart, and we are here to serve.