Yours, Mine and Ours – Marriage, Divorce and Credit
Whether you’re getting ready to walk down the aisle or headed to Las Vegas there are certain things to keep in mind in regards to your credit to make sure it retains its integrity. Neither of these life occurrences in and of themselves will have a direct impact on your credit history or credit scores, however there are financial issues that may arise that could affect your credit.
“How is getting married going to affect my credit history?”
Let’s start by dispelling a myth – when you enter into marriage you do not inherit your spouse’s credit. Each individual has their own separate credit file and they will always be separate even when you marry. If the person you are marrying has less than stellar credit you do not need to worry about these hiccups bleeding over to your credit unless you are added as an authorized user. Once you are married if you choose to open any joint accounts or buy a home together, those particular accounts will then show on each of your credit reports as a joint account. But any individual accounts you have now or open after you are married will show only on your credit report.
“What about my name changing? Will the credit bureaus recognize this?”
It is always a good idea to notify any existing creditors if you plan to change your name so the credit history doesn’t get interrupted. This is also true if you are changing your name after getting a divorce.
“I’m getting divorced. What happens with all of our joint debt and credit history?”
Dealing with a divorce can be a bit more complicated. It is always best to try to separate any joint accounts before you begin the divorce process or they will continue to stay as joint accounts even after the divorce is final. While the divorce decree may award the joint accounts to the other spouse, don’t count on that to protect your credit record since any late payments or defaults will still show up on your credit report. A divorce decree does not supersede the original agreement between the borrowers and the creditors and means absolutely nothing to the creditor and credit bureaus. If your spouse is awarded the mortgage, for example, and is late on a payment, it will show up on your credit and do significant damage. The same is true for any joint credit cards accounts, so close these accounts and open up new accounts in only your name. It is also recommended to refinance any auto loans or mortgages you have jointly in only the name of the responsible spouse.
If your spouse is an authorized user on any of your credit cards you should have the spouse removed immediately. Even though they may not have access to the actual card, they could still use it since they will have the account number.
A good place to start….
Prior to getting married or getting a divorce it would be wise for each person to obtain individual copies of your credit reports from each bureau so you can know exactly their credit standing.
Marriage or divorce can each have its own ramifications as far as your credit is concerned, but with a little common sense and due diligence you should be able to handle either and still keep your personal credit history intact.
If you have questions about these matters, please contact me directly. Let me know how we can be of assistance to you!
Gayle Arrowood, Registered Mortgage Advisor, Opes Advisors, Inc. 707.529.4321 or firstname.lastname@example.org