The Link Between Credit and Divorce
When it comes to divorcing your marital partner, there are many issues to consider from a legal standpoint. Credit issues are definitely one of them. Understanding the variety of credit account types opened during a marriage, however, will help you see through the pros and cons of each option.
Generally, there are two types of credit accounts: individual and joint. Everyone is asked about choosing one type when applying for a credit or mortgage loan.
The Individual Credit Account
The creditor considers all of your income, credit history and assets in the individual account. Whether you are married or single in this case, it's only you responsible for paying off a debt. There are some states that may involve your spouse for any debts occurred during the marriage, however generally it is tied to your individual responsibility.
The good thing about individual credit accounts is that no one can negatively influence your credit record. However, if you are not employed or work part time in a low-paying job, you may face some difficulties when obtaining a credit mainly because of your weak financial situation.
The Joint Credit Account
The joint account combines the incomes, financial assets and credit history of both marital partners. In this case, the pros are that the financial image from two people comes as stronger. However, each person is responsible for the eventual debt - and even a divorce can assign separate debt obligations.
The Account 'User' Option
There is a possibility to authorize another person to use your individual account. This has been the choice of many marital partners, however, it may have a similar result - with the creditor reporting your credit history with the name of your spouse next to yours.
Basically, user accounts are opened for convenience and aim to benefit people who have a low financial image. Students or homemakers are the ideal personas using these solutions, since they may not qualify for credit on their own.
In the end, if you divorce your spouse or separate from them, you should always pay special attention to your credit accounts. In case you are linked with joint credit accounts during the marriage, you should continue to make regular payments and be both responsible for your credit balance. However, if you divorce your spouse, the best way is to close your joint accounts or any accounts in which your former spouse was an authorized user.