Joining financial forces can be wonderful for a relationship. It can simplify purchases, encourage financial openness, and add trust. However, what does it mean when your significant other has a less than stellar credit history? How will it impact your credit score?
As the video states, your individual credit accounts cannot be impacted by your spouse’s credit score. Only joint credit accounts make both users legally responsible for the bill. All accounts in both names will show on your credit file (including accounts where you are a co-signer or an authorized user).
If you find yourself going through a divorce, be advised that each of you will be fully liable for your joint debts. Even if your ex agrees to make payments on a joint account as part of the divorce settlement, you are still legally liable if your name is on the account. Some tips to keep in mind when dividing the debt include:
- Communicate with your ex and make a clean financial break.
- Ask your creditors to transfer debt to the party responsible for payment.
- Make sure all joint accounts are paid on time during the divorce process.
- Ask the credit grantor to remove your ex as an authorized user on the account.
- Upon settlement, you and your ex might consider obtaining individual consolidation loans to cover joint bills, and terminate those accounts. This ensures you have met your obligations and will help you re-establish credit in your own name.
If you find that your credit is negatively affected by your ex’s poor payment habits, contact each credit bureau (Equifax, Experian and Transunion) and submit a consumer statement. You can explain your circumstances in detail. Some creditors may take the situation into consideration when evaluating future account risk.