How to protect your credit score from ex-spouse abuse
"It's unfortunate, but there are folks who become bitter, angry and even vengeful during a divorce and take it out on the ex by financially hurting him or her," says retired personal financial adviser and accountant Bill Christie. "We don't want to think about divorce when we're in a relationship, but things can happen and then it's too late."
Christie advises to protect and inform yourself from the outset. Here are a few suggestions on how to protect yourself from your spouse having access to and hurting your credit:
1. Do an inventory. The first step is to make sure you always have balances, transaction statements, contact names, addresses and phone numbers for any and all of your household accounts. Christie lists the following as "musts" to keep track of: joint bank accounts, credit cards, brokerage statements, tax returns, business interests, pension funds, RRSPs, loans, medical coverage, insurance (home, auto, life), wills and trusts, marital assets (artwork, antiques), mortgage, indebtedness, inheritances and safe deposit boxes.
2. Watch the joint accounts. "I can't emphasize enough how important it is to pay special attention to joint credit accounts," says Christie. "Things that have both spouses' names on it such as the mortgage, home equity loans and/or credit cards need to be kept track of by both people. Don't have one person controlling all accounts."
3. Take action immediately. "Again, if both spouses are staying informed, this won't be too much of a hassle. But joint accounts need to be a priority in the beginning stages of the divorce. Don't rely on the lawyer to deal with these accounts for you." Christie stresses the importance of the following:
- Ask creditors to close joint accounts, then try reopening the accounts under the individual name only.
- Remember that joint credit accounts are the responsibility of both spouses, even if the divorce papers state that only one spouse is responsible for paying them off. Creditors don't acknowledge the "rules" set out in the divorce -- they just want the money owed to them. Be sure to make the responsible spouse pay up, but also be sure to ascertain those bills are getting paid.
- Any arrears in payment to creditors will show up on both spouses' credit histories. If the responsible spouse isn't stepping up to the plate, make the payments yourself, even if you have to borrow the money, then sue the person for breaking the divorce decrees, but never let things go.
4. Establish yourself. You should be establishing your individual credit during a marriage. But if you haven't done so, it's even more essential to build that credit after going through a divorce. Christie offers the following tips for building up an individual credit history:
- Establish a steady work record.
- Pay all bills on time.
- Open a chequing and/or savings account. Use the cheques responsibly and make regular deposits.
- Apply for a local store credit card, and make regular monthly payments.
- Apply for a small loan using your savings account as collateral.
- Get a co-signer on a loan, and pay back the loan as agreed.
One more piece of advice Christie stresses is, "Just don't apply for too much credit because that doesn't look good for you either. Creditors will wonder why you need so many revolving accounts, even if you aren't using them. Choose wisely and have one or two cards (store and major) then one line of credit or loan. And having some sort of investment account and/or high interest account is always a plus."
Divorce can be stressful and trying, but individuals need to protect their individual finances. As Christie stated, "A person's credit history stays with them long after a marriage ends. By planning, informing and paying attention to things ahead of time, an ex's bad choices won't be reflected on the other person's credit."Written by Lily Wolf.
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