A family law judge out of New Jersey made the following finding in a case involving a post judgment request to sell a residence due to one party’s failure to refinance the residence post-judgment:
“This court takes judicial notice, as a matter of indisputable common knowledge, that a positive credit rating and score is one of the most valuable and important assets a party may presently possess.” (Emphasis Added)
The facts of the case where this quote stems from are very similar to my earlier blog, Home Sweet Home. Give it a read if you are interested by clicking HERE.
The focus of the blog will be steps you can take post judgment in order to protect and build your credit. It seems like common sense, but many parties do not realize that during marriage your credit score is tied to your spouse, and that connection can continue well after you case is complete. When loans or credit cards were taken out during marriage in joint name, the payment history and rating associated with the debt will follow the parties regardless of their marital status.
That is why it is important to…
Refinance All Debts
If you are assigned a debt as part of the dissolution, it is important that you refinance the debt so that you are the only party listed on the debt. This includes transferring credit card debt to an account in your name, refinancing auto loan or mortgages, or paying off debt in order to close the account.
The same goes for your former spouse. They should take steps to remove your name from any debts they are assigned within a prescribed amount of time. This should be included as a requirement in any Judgment resolving your case. Make sure the Judgment requires the other party to provide proof that your name has been removed from the loan or that certain debts have been refinanced
Failure to do so means your credit depends on whether the other party pays off the debt and if the payments are on time and consistent. If your name is still tied to the loan, it will be reported to the credit agencies under your Social Security Number.
Once there are negative reports on your credit, even when they are not your fault, it can take months – if not years – to have them corrected or removed from your report.
Build Your Own Credit
Once you separate your credit from your former spouse’s, it’s important to build a credit history in your own name. This is especially important if you did not have many loans or credit cards in your name during marriage. Credit can only be built over time by using the credit and making timely payment. Using a solo credit card account to pay for some routine monthly expenses and paying the bill in full each month is a good way to get started.
Always Monitor Your Credit And Protect Your Identity.
It is no secret (especially to avid readers of this blog) that divorces can get messy, so it is important to be aware of the potential damage an angry ex-spouse could cause to your credit. They have all of your personal information, including Social Security Numbers, addresses, date of birth, and likely most of your passwords to online accounts (Please change all your passwords). Even if there is no malice or fraud involved, a former spouse can cause real problems for your credit.
The more likely scenario is the other party fails to remove your name from a specific account. If your former spouse changed the password to the account and all of the mail is delivered to their home, it is impossible for you to know whether your name is still on the account unless you check your credit. That is why it is so important to be diligent about this after your divorce.
This is not a forever situation; eventually you can stop looking every month or two. However, if there are issues, checking regularly will allow you to address them immediately before any more serious damage can occur.
These steps sound simple because they are, but no matter how simple they seem, many people forget to take them and up suffering the consequences. Addressing how the debts are divided is a much more complex issue that requires the assistance of a qualified attorney.
Please contact us if you are considering a divorce from your spouse, a legal separation, or have questions regarding debts during a divorce. Nancy J. Bickford is the only Certified Family Law Specialist (CFLS) in San Diego County who is also a licensed Certified Public Accountant (CPA) with a Master of Business Administration (MBA). Don’t settle for less when determining your rights. Call 858-793-8884 in Del Mar, Carmel Valley, North County or San Diego.