Posted December 30, 2021 in Buyer Info,Buyer Purchases,Real Estate Advice
There are a lot of things to consider when going through a divorce. Where will you live? What debts are still yours and which are your ex’s? We could fill this page with all the questions that are probably going through your mind, but we are here to answer, “How does a divorce affect my credit score?”
Let’s start answering this question by defining “credit score.” A credit score is a 3 digit number between 300-850 determined by a calculating software – usually from FICO or “Fair Isaac Corporation.” Your score is determined by FICO or another financial company by your history, the different types of credit cards or loans that you’ve had or paid off, inquiries on your credit and the frequency of those inquiries, and your debt. Your credit score helps banks and credit card companies determine whether or not they can trust you with a credit card or loan.
After learning more about credit scores, you may be even more confused and be asking, “How does a divorce affect my credit score?” If a credit score is a financial calculation, what does it have to do with a person’s personal life? In a divorce, a married couple who wishes to separate will at one point have their assets divided. Debts that are in the couple’s names will also be divided. This is the part where a divorce may affect a person’s credit score: Debt collectors will continue to go after both members of the now-ended marriage. Let’s say you are responsible and get all your debt paid off, but the car that was given to your ex during the divorce hasn’t received monthly payments. If your name is still on the loan, your credit score will suffer as the collectors will go after you as well.
How does a divorce affect my credit score if I have a certificate of divorce? Collectors, bureaus, and your FICO credit score doesn’t care what paperwork you have. The bottom line is that there was money borrowed in your name and now the payments are late or not coming in at all. Debt collectors go after both ex-husband and ex-wife because they’re twice as likely to receive payment than if they just went after the one who was made responsible through the divorce.
What can you do if you’re stuck in this situation? Many mortgage lenders will help you or will have someone they use to help raise credit scores. They can help you get your name off debts, help you determine which debts you need to pay to raise your credit score, and more.
If you are worried about getting into a situation like this, you may want to go through each of your loans and get them in either your or your spouse’s name. The downside to this is that you will have to have your potential ex to be on the same page as you to sign you off of some of the loans. This can help, but won’t always keep the collections department from contacting you.
Once you are ready to work with an expert to get a better credit score, be sure to contact the Klinger Group at Nevada Desert Realty to get a list of experts who can help you fix your credit score!