By Taking These Steps, You Can Ensure That Your Credit Remains Intact

Category: Finance, Mortgages.

Unfortunately, the experience is, for many the exact opposite.

Depending upon how finances are structured, it can sometimes have a negative impact on both parties. Unfulfilled promises to pay bills, the maxing out of credit cards, and a total breakdown in communication frequently lead to the annihilation of at least one spouse's credit. The good news is it doesn' t have to be this way. The first step for anyone going through a divorce is to obtain copies of your credit report from the 3 major agencies: Equifax, Experian� , and TransUnion� . By taking a proactive approach and creating a specific plan to maintain one's credit status, anyone can ensure that" starting over" doesn' t have to mean rebuilding credit. It's impossible to formulate a plan without having a complete understanding of the situation. (Once a year, you may obtain a free credit report by visiting www.

Create a spreadsheet, and list all of the accounts that are currently open. AnnualCreditReport. com. ) Once you' ve gathered the facts, you can begin to address what's most important. For each entry, fill in columns with the following information: creditor name, the account number, contact number, type of account( e. g. credit card, etc, car loan. ), account status( e. g. current, past due) , account balance, minimum monthly payment amount, and who is vested in the account( joint/ individual/ authorized signer) . There are two types of credit accounts, and each is handled differently during a divorce. Now that you have this information at your fingertips, it's time to make a plan. The first type is a secured account, meaning it's attached to an asset. The second type is an unsecured account.

The most common secured. accounts are car loans and home mortgages. These accounts are typically credit cards and charge cards, and they have no assets attached. This way the loan is paid off and your name is no longer attached. When it comes to a secured account, your best option is to sell the asset. The next best option is to refinance the loan. This only works, if the purchasing, however spouse can qualify for a loan by themselves and can assume payments on their own. In other words, one spouse buys out the other.

Your last option is to keep your name on the loan. If you decide to keep your name on the loan, make sure your name is also kept on the title. This is the most risky option because if you' re not the one making the payment, your credit is truly vulnerable. The worst case scenario is being stuck paying for something that you do not legally own. This individual will review your existing home loan along with the equity you' ve built up and help you to determine the best course of action. In the case of a mortgage, enlisting the aid of a qualified mortgage professional is extremely important.

When it comes to unsecured accounts, you will need to act quickly. If you are merely a signer on the account, have your name removed immediately. It's important to know which spouse( if not both) is vested. If you are the vested party and your spouse is a signer, have their name removed. If there are jointly vested accounts which carry a balance, your best option is to have them frozen. Any joint accounts( both parties vested) that do not carry a balance should be closed immediately.

This will ensure that no future charges can be made to the accounts. If you do not have any credit cards in your name, it is recommended you obtain one before freezing all of your jointly vested accounts. When an account is frozen, it is frozen, however for both parties. By having a card in your own name, you now have the option of transferring any joint balances into your account, guaranteeing they' ll get paid. Keep in mind that one 30- day late payment can drop your credit score as much as 75 points. Ensuring payment on a debt which carries your name is paramount when it comes to preserving credit. It is also important to know that a divorce decree does not override any agreement you have with a creditor.

The message here is to not only eliminate all joint accounts, but to do it quickly. So, regardless of which spouse is ordered to pay by the judge, not doing so will affect the credit score of both parties. Divorce is difficult for everyone involved. By taking these steps, you can ensure that your credit remains intact.