Protecting your credit before the divorce

A looming divorce can be stressful on anyone and in the heat of the moment people who once shared love and respect can do terrible hurtful things to each other. If care is not taken during this stressful time, divorcees can find themselves in hot water later on down the track, worse still it is possible that serious damage can be done to an individual’s credit rating. It is in your best interest to make sure that your credit and good name are protected before, during and after divorce. By taking a few precautionary steps, and having a solid understanding of the way your accounts work, before the divorce begins will mean that a recent divorcee wont have quite so many pieces to pick up after the divorce is over.Plan ahead and nip any chance of damage to your credit in the bud, before it gets serious.

Understanding Your Accounts

There are two main types of accounts. These are called individual and joint and we will address them in detail in the course of this article. One person owns an individual account and, in order to have the account, that person’s income, assets and credit file are used as a decider of whether the person is eligible. The lending institution does not factor the possibility of a partner into the person’s financial obligations or assets when deciding to give an applicant an individual credit account. What this essentially means is that the person who owns the account is responsible for the payment of the account, not a second party. This individual account will be noted in your credit history and never in your partners if they are not the holder of the individual account. Always research the situation because this is where things can get tricky. If you live in a community property state, all debts, regardless of their type, are included as joint responsibility while two people are married. This means that if you are married and your partner has an individual account on which a large debt is owed, even though you are not responsible for the debt, it becomes your responsibility anyway. Even worse, this debt will be included in your credit report, which can be damaging if your partner doesn’t pay it. An individual account can have its good points as well as bad. If you don’t work or have a very low income, it can be difficult to get credit because your income won’t support it. Some times, in this situation, the only way to get credit is to be included or include your partner on the account or start a joint account together.

Individual accounts and authorized users

If you have already got an individual account, it is possible to add an authorized user. An authorized user is someone that has access to your account at his or her convenience. But keep in mind that if you include another person in your individual account, you are still the only person who is responsible for the account. This means that any debts that are owed are the account holder’s responsibility, not the authorized user that has been included.