Category «Credit rating»

Credit, Loans, Divorce, and You

Most people believe that a divorce is the worst thing that can happen to a household, that is until after the divorce and they see what it did to their credit rating. Divorcing couples should understand that divorce isn’t a division of everything and that they will still be liable for a multitude of items.

For joint accounts, both divorcing members will be responsible for the balance. That means that just because your ex got the house if they don’t pay their credit card off it will go on your credit as well. Both credit reports will suffer if one does not pay. Calling the credit provider may offer a bit of relief by changing the joint account to an individual account, or closing it off completely. This will keep a card with no balance from being maxxed out by an angry ex-spouse.

Consider closing accounts in your name where the other party is an authorized buyer. Again, this will keep cards from accruing charges where the angered spouse is seeking revenge. Divorce will divide property, but in the eyes of credit, the two parties are still liable for all charges made on that credit service.

Individual accounts in community property states will be seen the same as a joint account. If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, you and your divorcing spouse will be responsible for any and all charges made during the marriage; whether on a joint account card or an individual one. Also, the debts and history of payments will be seen on each other’s credit report.

Mortgages and home loans may require a refinancing to remove the spouse from the liability. Seek informed help in regards to commercialized loans.

A general to-do list for divorcing couples is to make sure you’ve pulled your credit and removed all discrepancies, pay off all payday loans, close joint accounts and reclaim your name, open an individual credit account unless you live in a community property state, change your insurance beneficiary, check on your retirement savings and insurance to see if you are covered afterward, and keep financial records for two years until all the dust has cleared.

Divorce is a nasty business, but it is a business. Treated as such, both parties can come out of it a bit better off credit-wise.

How to Improve Your Credit Rating Fast

There are many ways you can improve your credit rating and some of them are unknown to the vast majority of people. It may seem like there is no end in sight when you have poor credit, and the thought of actually obtaining a mortgage can become quite daunting.

If you live in the US, then the first thing you should know is that even if you have terrible credit, you could probably still apply for a $500 loan at whoneeds500.com, or get a mortgage through the sub-prime sector. It may not be an option right now because of the recession, but certainly when the financial economy begins to even itself out. The problem with obtaining credit via the sub-prime route is that the services offered often carry a very high interest rate, usually much more than is affordable.

So how do we increase our chances of securing the elusive low-interest rate? We increase our credit score. This may be difficult, to begin with, particularly if you still have outstanding debts, but it can be done over time if you persevere with it.

The first thing you should do is contact all of your creditors and make an offer of payment. You may have some chasing around to do if it has been passed on to debt collection agencies so the best idea would be to obtain a credit report for yourself and find out exactly what you owe and to which companies.

The advantage of having your debt passed on to debt collection agencies is that they cannot add any more interest to the total amount, regardless of how long the debt is with them. The law prevents them from doing so and as such, you can breathe a sigh of relief, the amount won’t increase!

Once you have an agreement in place with your creditors it is vital that you maintain the payments so as to not repeatedly default on your agreement. Defaults on your credit report raise the red flag and have a very bad reflection on your credit score.

The next thing you must do (and this is absolutely imperative) is to stop applying for credit. That means credit cards, store cards, HP and catalogs etc. Absolutely everything! Applying for credit will leave a footprint on your credit score and repeatedly applying for credit can actually damage your chances of securing what you want.

Assuming you are now paying off all of your debts, not defaulting and have stopped applying for credit you’re halfway to getting a better credit rating. You should also ensure that all of your utility bills are paid on time and make sure there’s enough money in your bank account to cover direct debits and standing orders. Having a returned payment will not only incur charges, but it’ll also reflect badly on your credit score.

If you’re in UK, then another idea is to apply for a prepaid Mastercard through Cashplus. The reason being is that they have a credit builder. It’s explained on their website and is very good at building your credit. It may seem like you’re downgrading yourself if you have a current account already but it truly does help in the long run.

When your debts have become more manageable and your credit score has begun to increase, you may want to consider applying for a low monthly contract mobile phone. These are renowned for increasing your credit rating and even if your credit isn’t great you can pay a deposit to ensure that you get the contract. The idea is that you need to show that you can make payments on time and having a contract mobile can do that for you providing you don’t miss payments!

Be careful not to take out more than you can afford to pay though, you don’t want to wipe out all of the hard work you’ve done so far!

Other ideas are taking out a Capital one credit card, or Vanquis. They offer credit cards with low limits on them (usually around $100) to do pretty much the same thing as a contract phone would do. I have a friend who took one out and used it to pay for his petrol-that’s all. Then he would repay the amount back straight away so as to not incur any interest charges. The result was phenomenal and he now has the highest credit rating in my circle of friends.

I think the last time I asked he had a credit limit of $25,000 spread over various credit cards and every balance was at zero. I am in awe of this fellow and aspire to be like him one day!

My experience is to fight everything

It is possible to ignore your creditors for 7yrs..I’ve done it and much has been dropped off of my credit report. Actually lots. But I made a mistake to fight one and the credit was sold to a collection agency…Yes, he is correct…(I have a good friend who is a collector for a well respected agency) he said the same thing. If you make any size payment…even if it is $5, if you settle the clock re-ticks.

He actually told me that its a trick of the industry…

So you are saying don’t pay the collectors and let it fall off? Also I have some things on my crdeit report that should have been taken/fallen off a long time age. What can I do to get them off?

My experience is to fight everything on the report that you think should be released. I have also had a lot of luck with that. Many times debt has been discharged and still shows past the 7yrs, creditors don’t report back to the credit bureaus, creditors maintain faulty records and/or there are laws about how often a creditor should contact you, via mail, phone, etc before the debt is considered a collection item.

There are sooooooooooo many ways. Although my own credit is not perfect..I have foundt these things to work for me. But, I would not tell you to do anything. You have to know your situation. Everyone’s situation is very different. I had no problems with it. You can’t get collect on something that is not there. Judgement or not..

7 year theory

I have a question.

I know that after 7 years things on your credit fall off, but does the 7 year time period start over with each new collection agency that the account is sold to?I have a debt with Discover originally that has been transferred for the 4th time to a new collection agency.

I understand the process of buying debts but on my end,do I have to being another 7 years with this new creditor?