Fix Your Credit Report After a Divorce
When a couple is married, they often hold joint accounts, such as savings, credit cards and mortgages. This links their credit scores together. If you’ve just gone through a divorce, your credit may be in shambles. Sometimes, one partner will run up a huge credit card bill, deplete the equity in the home or otherwise try to wreak havoc with the credit score of the other party. It’s important to address this problem head on.
Determine who is responsible for which debts — You would usually do this during the divorce settlements. Some states have communal property laws, which means that you’ll have to divide the debt 50/50. Other states take your personal circumstances into the equation, such as requiring the partner that has a higher income to pay a larger percentage of the debt but be careful — if your spouse files bankruptcy, you will be responsible for 100 percent of the debt.
Close all joint accounts — This prevents either of you from creating more debt in the other person’s name. Note that the debt is still there and that both people are responsible for the debt from when the account was open.
Transfer your portion of the debt into an account in your name — Some credit card companies are willing to work with couples going through a divorce by creating two individual accounts and transferring the debt to each. If your card won’t do this, apply for a new credit card that allows balance transfers. Your spouse should do the same with his portion of the debt. You then will not have any debt in both names.
Practice financial responsibility — You’ll now have total control over your credit score. You can improve it by paying down your debt and by always paying your bills on time.
Submit a note of explanation to the credit bureaus — All three of the credit bureaus — Experian, Equifax and TransUnion — allow you to place a consumer explanation on your credit report. This can be particularly helpful if your ex-spouse was responsible for paying a debt and didn’t. Contact the individual credit bureaus to learn about this process.