You may now kiss the bride is a phrase many Americans will hear more than once in their lifetime. Let’s face it, in our society, divorce runs rampant. According to the CDC’s National Vital Statistics System, 41% of first marriages end in divorce, 60% of second marriages end in divorce and 73% of third marriages end in, you guessed it, divorce. Why is our blog hoping on this soap box, you ask? Well the answer is simple, divorce is one of the most detrimental life events when credit concerned.
As a veteran of the divorce process, I can stand before you and honestly say the number one reason for divorce is…………marriage. I kid, I kid. But seriously, divorce is triggered by several catalysts. Among that laundry list you will find financial strife, argumentative relationships and infidelity. Most people are under the assumption that when that gavel rings true throughout the courtroom, they are free from their previous spouse and all of their financial commitments. This couldn’t be further from the truth.
When a marriage is resolved on a legal level, the judge will mandate the distribution of not only assets, but debt as well. I can’t tell you the amount of times I have spoken to a client with less than advantageous credit and the negative items impacting their score are trade lines that the ex-spouse was supposed to be responsible for. So why is this item still holding me back? My ex-husband made three late payments on the house, six months after the divorce. This shouldn’t affect my score!
The way the credit bureaus and creditors conduct their business is different that you would expect. They are not legally required to recognize a divorce decree. Think about it. You signed on the dotted line for that home purchase just like your ex-spouse did. The banks don’t care that your relationship didn’t work out, they care about getting paid. So what can you do? You could refinance all of the joint accounts into your own name, however you may run into underwriting issues if you accounted for two incomes.
I know this blog post seems rather sullen, but the ultimate take away is not all hope is lost. There are several strategies one can implement to correct these mishaps on their credit reports. If you are going through a divorce or have gone through a divorce, call us today to chat about what we can do to help your credit scores survive this change.