The Lindley Team at Mortgage Express  |  503.517.8641

 Navigating Divorce and Your Credit Report

Many divorced couples run into financial problems a few months after a divorce when an ex-spouse starts making late payments on a shared account. These late payments appear on both of the account holders’ credit  reports, despite divorce decrees. Once the records appear on your credit report, it will show a negative status for those accounts that were not paid on time or simply, not paid at all.

In order to avoid these issues, divorced couples should close or refinance all shared accounts if at all possible. Any shared credit cards, loans and mortgages will continue to be a joint responsibility until you work directly with the financial institution to resolve the issue.

Not only can divorce lead to emotional strain, it can also cause all sorts of financial problems. All those shared accounts and co-signed loans that once seemed so romantic are now the cause of major issue. The following important tips can help avoid financial damages that will show up on your credit report and stay on your report there for years to come.

Managing Shared Accounts–It is not always possible to close or refinance all your shared debts after a divorce. Mortgages and large loans can be difficult to refinance quickly. In this situation, it is important that you and your ex work together closely to manage a shared account. Remember, your credit will be damaged if your ex cannot manage the shared account responsibly, and vice versa.

One of the easiest ways to manage a shared debt with an ex is by setting up an online account. This way, you can both easily login to check on the payment status of the loan. If you see that the debt has not yet been paid for the month, you can contact your ex or decide to pay the bill yourself in order to avoid a late payment and damage to your credit score. Encourage your ex to sign up for automatic payments that will deduct the bill from his or her
accounts each month.

An ex with bad credit may decide to ruin his or her former spouse’s credit by not paying a shared account. Keep in mind that negative reporting, such as charge-offs, liens, judgments, bankruptcy filings, foreclosures and  repossessions related to shared accounts can also appear on both account holders’ credit reports. It is advisable to continue working with your ex to manage your shared finances after a divorce when at all possible.

Recently divorced borrowers can build their independent credit history by opening up new credit card account. In order to do this you have to have your credit report in good shape and some decent credit scores. Using a credit account responsibly each month has a positive impact on your credit scores and will give you a few extra points towards your scores each month.

Protecting Your Identity – It is a sad truth, but many couples go through messy divorces that leave both parties as bitter enemies in the end. When this is the case, it is important to consider the potential damage that a disgruntled spouse could do to your credit. Armed with your Social Security number, birth date, and other financial details, an ex could potentially steal your identity and cause significant damage to your credit.

After a contentious divorce, you should take a few steps to guard against any possible identity theft crimes before anything can happen. Sign up for credit monitoring that immediately alerts you to changes in your credit data. Be on the lookout for suspicious mail and signs that new accounts have been opened in your name. Change your online banking passwords and request that your account numbers are changed. If you suspect identity theft, contact the credit bureaus immediately and place a 90-day fraud alert on your credit reports.

Most importantly, simply be aware of the possible risk for identity theft. According to a 2013 identity theft survey by the Better Business Bureau, 50% of identity thieves turned out to be relatives, close friends, and neighbors of the victim. Denying that an ex-spouse could steal your identity may cause you to miss important early signs of fraud.

It is always important to work with an experience mortgage professional who specializes in working with divorcing clients. A Certified Divorce Lending Professional (CDLP) can help answer questions and provide excellent advice. The Tammi Lindley team is the only Certified Divorce Lending Professional team in Portland.

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