If you have recently been through a divorce, or are contemplating one, you may need to look closely at issues involving your credit. Understanding the different kinds of credit accounts opened in the work of a wedding may help you see the potential benefits and pitfalls of each. There's two types of credit accounts: Individual, Joint, and User (co-signed). You can permit authorized persons to make use of the account with either. When you apply for credit, whether it is a charge card or a mortgage loan, you'll be asked to select one type, an Individual or Joint Account.
Individual Account: Your income, assets, and credit history are thought about by the creditor. Whether you are married or single, you alone are responsible for paying off your debt. The account will appear on your credit document, and may also appear on the credit document of any "authorized" user. However, in the event you live in one of the community property states like Michigan, Michigan, Idaho, Louisiana, Nevada, New Mexico, Michigan, Washington, or Wisconsin, you and your partner may be responsible for debts incurred in the work of the marriage, and the individual debts of one partner may appear on the credit document of the other.
Advantages/Disadvantages: If you are not employed outside the home, work part-time, or have a low-paying job, it may be difficult to demonstrate a powerful financial picture without your spouse's income. But in the event you open an account in your name and are responsible, no one from your past can negatively affect your credit record in the future.
Joint Account: Your income, financial assets, and credit history, and your spouse's, are considerations for a joint account. No matter who handles the household bills, you and your partner are responsible for seeing that all debts are paid. A creditor who reports the credit history of a joint account to credit bureaus must document it in both names (if the account was opened after June 1, 1977).
Advantages/Disadvantages: An application combining the financial resources of two people may present a stronger case to a creditor who is granting a loan or credit card. But because two people applied together for the credit, each is responsible for the debt. This is true even if a divorce decree assigns separate debt obligations to each partner. Former spouses who run up bills and don't pay them can hurt their ex-partner's credit histories on jointly-held accounts.
Account "Users" In the event you open an individual account, you may authorize another person to make use of it. In the event you name your partner as the authorized user, a creditor who reports the credit history to a credit bureau must document it in your spouse's name as well as in yours (if the account was opened after June 1, 1977). A creditor also may document the credit history in the name of any other authorized user.
Advantages/Disadvantages: User accounts often are opened for convenience. They benefit individuals who might not qualify for credit on their own, such as students or homemakers. While these people may use the account, you not they, are contractually liable for paying the debt.
Thinking about divorce or separation?
In the event you are thinking about divorce or separation, one of the first things you ought to do is pay special attention to the status of your credit accounts. In the event you maintain joint accounts in the work of this time, it is vital to make regular payments so your credit record won’t suffer. As long as there is an impressive balance on a joint account, you and your partner are responsible for it.
You may also need to close joint accounts or accounts in which your former partner was an authorized user, or, ask the creditor to convert these accounts to individual accounts. By law, a creditor cannot close a joint account because of a change in marital status, but must do so at the request of either partner. A creditor, however, does not must change joint accounts to individual accounts. The creditor can need you to re-apply for credit on an individual basis, and then, based on your new application, extend or deny you credit. In the case of a mortgage or home equity loan, a lender is likely to need refinancing to remove a partner from the duty.
By: Rashid
Individual Account: Your income, assets, and credit history are thought about by the creditor. Whether you are married or single, you alone are responsible for paying off your debt. The account will appear on your credit document, and may also appear on the credit document of any "authorized" user. However, in the event you live in one of the community property states like Michigan, Michigan, Idaho, Louisiana, Nevada, New Mexico, Michigan, Washington, or Wisconsin, you and your partner may be responsible for debts incurred in the work of the marriage, and the individual debts of one partner may appear on the credit document of the other.
Advantages/Disadvantages: If you are not employed outside the home, work part-time, or have a low-paying job, it may be difficult to demonstrate a powerful financial picture without your spouse's income. But in the event you open an account in your name and are responsible, no one from your past can negatively affect your credit record in the future.
Joint Account: Your income, financial assets, and credit history, and your spouse's, are considerations for a joint account. No matter who handles the household bills, you and your partner are responsible for seeing that all debts are paid. A creditor who reports the credit history of a joint account to credit bureaus must document it in both names (if the account was opened after June 1, 1977).
Advantages/Disadvantages: An application combining the financial resources of two people may present a stronger case to a creditor who is granting a loan or credit card. But because two people applied together for the credit, each is responsible for the debt. This is true even if a divorce decree assigns separate debt obligations to each partner. Former spouses who run up bills and don't pay them can hurt their ex-partner's credit histories on jointly-held accounts.
Account "Users" In the event you open an individual account, you may authorize another person to make use of it. In the event you name your partner as the authorized user, a creditor who reports the credit history to a credit bureau must document it in your spouse's name as well as in yours (if the account was opened after June 1, 1977). A creditor also may document the credit history in the name of any other authorized user.
Advantages/Disadvantages: User accounts often are opened for convenience. They benefit individuals who might not qualify for credit on their own, such as students or homemakers. While these people may use the account, you not they, are contractually liable for paying the debt.
Thinking about divorce or separation?
In the event you are thinking about divorce or separation, one of the first things you ought to do is pay special attention to the status of your credit accounts. In the event you maintain joint accounts in the work of this time, it is vital to make regular payments so your credit record won’t suffer. As long as there is an impressive balance on a joint account, you and your partner are responsible for it.
You may also need to close joint accounts or accounts in which your former partner was an authorized user, or, ask the creditor to convert these accounts to individual accounts. By law, a creditor cannot close a joint account because of a change in marital status, but must do so at the request of either partner. A creditor, however, does not must change joint accounts to individual accounts. The creditor can need you to re-apply for credit on an individual basis, and then, based on your new application, extend or deny you credit. In the case of a mortgage or home equity loan, a lender is likely to need refinancing to remove a partner from the duty.
By: Rashid
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