Protect and repair your credit after divorce
Y our life after divorce will be determined by a number of factors, which include what condition your credit is in as you legally go your separate ways. Unless you have that rare divorce where you both are able to agree on every important issue (some might ask why you’re divorcing), your credit will suffer. Understand something very important. What decisions you make prior to a divorce filing and what actions you take during the divorce will have a significant impact on your future.
- Before you physically separate, pull a credit file. Keep the hard copy in a safe place. This will serve as evidence when your credit scores change. And they will
- If you don’t have credit cards in your own name, open them immediately
- Close joint accounts just prior to or immediately after a separation
- Pay bills and credit cards that are in your name only from joint funds. Once you separate, those obligations may be solely yours
- Late Payments – A payment 30 days late from a consumer with a good score can lower 60-80 points. A payment 30 days late from a consumer with an excellent score will cause your rating to take a hit of 90-100 points
- Maxing out a credit card – A small drop of 10-20 points
- Foreclosure – expect your credit score to drop 150-200 points
- Bankruptcy– Your FICO score will drop 200-250 points
Credit repair companies are everywhere it seems. Their claims range from providing you with a clean pristine credit report to cleaning up your credit bureau credit files using existing consumer laws. The truth is that the legitimate companies are closer to the latter – that they leverage consumer law to force credit bureaus to change or remove entries that CAN be legally altered or removed.So how do you determine which credit repair companies are legit, and which ones aren’t?
You can categorize these companies in two ways. One category contains those companies (often called debt settlement companies) that promise to reduce by 50% or more what you owe your creditors. The truth is, they cannot. Only a direct negotiation by you and your creditor can accomplish that, and most creditors are not willing to do that. These companies typically ask for up front fees and promise to accept monthly payments over the course of a few years. They claim they will accumulate your monthly payments, and when the timing is right, approach your creditor with an offer to settle for pennies on the dollar. They claim your creditor will delay any legal action against you once these so-called credit repair companies notify your creditors that they represent you. Do not believe it.
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The Federal Trade Commission, which regulates these businesses, enforces the Fair Credit Reporting Act, and suggests these tip-offs when a company may be up to no good:
- The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised
- The company does not tell you your rights and what you can do for yourself for free
- The company recommends that you do not contact any of the three major national credit reporting companies directly
- The company tells you they can get rid of most or all the negative credit information in your credit report, even if that information is accurate and current
- The company suggests that you try to invent a new credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number
- The company advises you to dispute all the information in your credit report, regardless of its accuracy or timeliness
On your behalf, they will contact all credit reporting agencies and dispute any and all items that are inaccurate, untimely, misleading, biased, incomplete or unverifiable (questionable items). If the bureaus cannot verify that the information on their reports is indeed correct, then those items must be deleted. Consumers are often surprised that debts that haven’t been fully paid and appear on credit files CAN be removed if the creditor doesn’t verify the debt in the time period legally provided by law. The Fair Credit Reporting Act outlines all your rights. Can you do this yourself and not pay these legitimate credit repair companies? Absolutely, yes you can, but you need to know the ropes. Many creditors are wise to these disputes, and can place roadblocks in front of the average person looking to do it themselves. Call Lexington Law at 877-280-3818. It’s a phone call that could change your life.
This is in no way intended to be legal advice. Consult an attorney for specific guidance.
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