Over the course of my career—first as a bank manager and now in my job at Equifax—I’ve worked with a lot of people coming out of a divorce. They’re trying to start a new life on their own, and the financial details can be a tough knot to untangle.
The big question I always hear from people is, “In the settlement, the divorce decree states this debt belongs to my ex-spouse, so why is it showing up on my credit report?”
Unfortunately, lenders, credit grantors, and credit-reporting agencies don’t care about who got what or what your divorce decree states. If your name is on the account and the debt is held jointly, you are responsible for making sure that debt gets paid.
Here are some of the other most common questions I hear about credit and divorce.
FAQ: Will my spouse’s information or accounts appear on my credit report?
You and your spouse each have your own separate credit file. The consumer reporting agencies maintain credit files on individual U.S. residents only. They do not maintain joint files for spouses. Only accounts that are in both names will show up on both files. Any account for which you are a cosigner or an authorized user will also show up on your file.
FAQ: How do I make sure my credit report accurately reflects my name change and new personal information?
If your personal information (name, address, etc.) is incorrect on your credit file, we recommend that you first contact each of your creditors and confirm that your personal information is correct in their records. Updating your personal information with your creditors will help make sure that information they report to Equifax is correct.
You may need to provide the following documentation to confirm your identity and personal information:
- Court documents for legal name change
- Valid driver’s license
- State or military ID reflecting new name/address
- Copy of Social Security card reflecting name change
FAQ: How do jointly held accounts show up on my credit report?
When you open a new line of credit, you can apply for an individual account or a joint account. Joint accounts will be listed on your credit report as a joint account if the creditor reports it as such.
FAQ: How do I separate my credit accounts from my ex-spouse’s accounts?
You can close all joint accounts (making sure the balance is paid in full and on time) and reopen accounts in your name only. You should be able to avoid future credit tangles with new accounts.
However, closing out joint accounts and reestablishing individual accounts may affect your credit score. A better approach might be to work with your creditor to separate the debt (if possible) and reestablish the account in your name only.
FAQ: How do I inform lenders and credit grantors of my divorce?
If you have individual accounts, your divorce probably won’t affect your credit cards or loans too much. If they’re joint accounts, contact each creditor individually and work with them on how best to report the debt to the credit-reporting agencies.
FAQ: Can my ex-spouse see my credit report?
Your spouse or ex-spouse cannot see your credit report without written permission from you.
FAQ: My ex-spouse is responsible for some late payments on my credit report. How do I explain that?
The bottom line is that if you signed up for an account with someone else, you are responsible for that debt being paid. Even if your spouse agrees to pay the debt in the divorce settlement and that is reflected in the divorce decree, you are still legally liable for the debt. The creditor will hold those who applied for the account, whether it is individual or joint, responsible for paying on time and in full.
However, if you do find yourself with a blemish on your credit report due to your spouse’s payment history, you can submit a consumer statement to be attached to your credit report. You can detail the situation and explain your circumstances. Some creditors may take the statement into account when evaluating you for future credit and risk.
Don’t forget to check out last week’s post on Establishing Credit with Joint Accounts.
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Diane Moogalian is vice president of operations for Equifax Personal Information Solutions. Prior to joining Equifax in 2007, Diane held several strategic roles with leading financial services companies.