Going through a divorce can wreak havoc on your credit report. You have to take care to separate all your accounts, and there is always the chance that your ex will try to do something to ruin your credit. Fortunately, once you take care of all the details, you can work toward rebuilding your credit.
History
In the not-so-distant past, women had a difficult time getting credit without having a man–usually a husband–act as a cosigner. If a woman became widowed or divorced, she couldn’t get credit on her own, even though she may have been the one managing the household’s finances all along. The Equal Credit Opportunity Act was enacted in 1974 to help alleviate these problems. It states that creditors cannot deny credit based on a variety of statuses, including gender or marital status.
Geography
Some states have community property laws, which state that all property that you’ve acquired throughout the marriage belongs to both of you. Unfortunately, this also includes debt. If you have acquired a great deal of debt as a couple–even if it was primarily your husband who made the purchase–you will be required to pay it back in a divorce. Other states have equitable distribution laws, where a court will look at the details to decide a fairer distribution of both property and debt.
Considerations
Take care to separate all your accounts. If you are both responsible for paying a credit card bill, for example, ask the company to divide the debt equally by opening new accounts in each of your names. Most companies will do this. If you will be going back to your married name, change it as quickly as possible and make sure that you’ve done it on all accounts. After the account separation, order a copy of your credit report to be sure that everything is correct.
Time Frame
Repairing your credit takes time. If you correct errors on your report, it can quickly improve your score. If your low score, however, is based on late payments or a high debt-to-credit ratio, you’ll only see improvement with consistent financial responsibility.
Warning
You will find a great many credit repair scams. Many will try to prey on divorced women. The only place to get a free credit report is the Annual Credit Report website. You will, however, have to pay a small fee if you want to see your credit score. Most sites will try to sign you up for a credit monitoring service, with a monthly fee. You cannot legally create a new credit profile–any company that suggests this process is running a scam. Other signs of a scam are requiring up-front payment and guaranteeing a better score in a short period of time.
Photo Credit
- financial report image by Christopher Hall from Fotolia.com
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