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Divorce, Credit-Management

The Real Credit Queen's View on Credit

    

Written by Angela Setters

Conquer Credit Management has been the go-to in the entertainment and high-profile world for credit management and restoration for more than 25 years. FICO scores run the world of instant approval  as well as overall personal status—and not to mention one’s quiet ego that their credit score is badass! 

As a matter of fact, even some dating websites are now asking you to post your credit score. Suffice to say, having a credit score of 700 or better goes way beyond the bank.

Choosing the right Credit Management Company

When choosing the right company to deal with when it comes to this important personal quest, Conquer Credit Management has been winning for our clients for nearly 3 decades, navigating the tricky waters of policy changes and regulations. It is my personal mission to treat every client like my best friend and help each one understand how their credit is an investment tool to build wealth. With our commitment to easy education, uncovering difficult facts, expertise, and hands-on results, there is no better advocate than my team of credit and financial experts! From helping someone qualify to buy a home, to assisting in large merger and acquisitions from a business credit perspective, I have done it all. There is no project too big or too small for me to put on my cape and help my clients win!

How to Manage Personal Credit During (and Before) a Divorce

Divorce is hard on everyone involved, even when the split is amicable. There are credit mistakes made by many couples pre-divorce, and even more post-divorce. It’s important to plan ahead to minimize the damage that can happen at any time due to illness, unemployment, bankruptcy, and of course the divorce itself.

Protect Your Credit Pre-Divorce

Pre-divorce strategies should be a foundational part of any marriage financial planning. Just because you put these strategies in place, doesn’t mean you are planning on the impending doom of your union. Instead, you are protecting your loved one and strengthening the partnership by putting safeguards in place. The most important strategy is to keep your credit profiles separate.

When opening new accounts, it is best to open them in only one person’s name instead of jointly. This includes mortgages and vehicle purchases. With these types of accounts, this helps distribute the debt-to-income ratio between the two of you. Although this ratio has nothing to do with your FICO scores, it is the first thing an underwriting department will review. It can also help you qualify for different loans which might not be available to you if you would apply jointly.

Many consumers apply for credit cards jointly because they want their spouse to have a card. A better strategy is to open the account as an individual card holder and add your spouse as an authorized user. When you do this, your spouse will still have access to use the account and it will report to their credit as well as the card holder’s. The difference is that if something goes wrong with the account, such as a late payment or charge-off, the authorized user is not liable and can simply be removed. After being removed from the account, the negative information will no longer report to their file. However, if you apply for a card jointly, you are both liable for any debt and face the possibility of judgments being filed in a charge-off situation. This will result in both of you suffering the reporting of any negative action on the account instead of just one of you.

How to Manage Credit in an Amicable Divorce

Even if it’s a friendly divorce, there are unseen circumstances that can detour your best-laid plans. It is prudent to set up this separation so if one of you suffers from a sudden loss of income, the damage can be minimized. In these cases, the uninjured spouse can carry the weight of the finances while the other spouse rebuilds. If you do not set your credit cards up this way, then you will have to reapply for the same card as an individual. This can result in a reduced credit limit, the loss of the age of a card, and denial based on current income/debt ratios.

While a divorce decree outlines who is responsible for what accounts, it does not hold any weight with the credit reporting agencies, or the creditors involved. All the creditor cares about is that someone should be making timely payments, and if one spouse decides they are going to stop paying on account, they take the other spouse’s credit down with theirs. While we would love to see all dissolutions occur in a friendly manner, we often see the ugly side of divorce.

Don’t be afraid to ask for the things you need in your divorce. Go the extra step and ask that the judge rule that the person keeping the house must refinance and take the other person off of the loan. But remember, the person not living in the house will also need to be removed from the title. If you skip these steps and do not have the loan refinanced, even if your divorce decree states your spouse will get the house and make payments, that is not enough to compel them to do so. We have seen many spiteful couples battle to see who can trash the other’s credit faster. Have a plan on all joint property ownership and how that will affect one’s credit history for future buying power. Remove all liability from insurance policies tied to any property you will no longer share interest in.

Another reason to separate your credit profiles is the possibility that one of you will be forced to consider filing bankruptcy. If one spouse files bankruptcy and the other spouse is still on the accounts that are listed on the Schedule F, both parties will have those accounts report to their credit as Included in BK. This is a derogatory remark that is held against anyone on the account and can be severely damaging to your FICO scores.

How to Manage Credit in a Volatile Divorce

What if you are caught up in a very volatile divorce? You can protect your credit and personal information from your ex. The first thing you should do is freeze your credit. You can contact each of the credit reporting agencies and this is the best solution for real protection. With a freeze in place with all 3 agencies, if someone else tries to apply for credit in your name, you will be notified. In fact, the freeze will protect you so soundly that you will have to lift it in order to apply for credit yourself. You determine the timeframe to lift the freeze, and then it will be put back in place when that timeframe passes.

You can also file a fraud alert in the event that your ex tries to use your credit. This alerts creditors to take extra precautions when allowing someone to apply for credit in your name. However, this method is not bullet-proof and should be used as a secondary precaution to the freeze which has been placed.

Even when both of these items are in place, you should review your credit inquiries often. You will be able to see any applications which are being made without your knowledge as soon as they are made. You should also review your credit profile regularly to see if any new accounts have been recently opened that you did not authorize.

When It Comes to Credit, Better Safe Than Sorry

We believe in the age-old saying that it is better to be safe than sorry, but we hope you never have to worry about these things. We are here to make things easier for you in the event this is already your experience, so please do not hesitate to call (818) 530-0225 or email us at angelas@conquercredit.com.

Go to this page about online divorce to learn more.

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