"'Credit' as Intimacy after Divorce" (Divorce Balance, 675)

Divorce Balance

Wednesday, March 2, 2005
"Credit" as Intimacy after Divorce

Early last week, one of my longer-term divorce coaching clients mentioned a request from his former wife. A wee bit outside of her financial reach was the new car she fancied, to replace her current 2002 coupe.

So she asked a favor.

"Nothing out-of-pocket," she assured the former love of her life. Just his co-signature on a zero-down, six-year loan.

I gently reality-checked two things for him. First, six years is a commitment that is twice as long as she has so far kept the vehicle she's now driving. Second, it's 20% longer than the two of them were married.

"Yeah, but it costs me nothing."

Really?

Consumer advocate Clark Howard reminds divorcing individuals, "If joint accounts are not closed, you are legally responsible if your ex-spouse doesn't pay, no matter what the divorce decree says. Your credit can be ruined and you can get knocked out of the credit market."

That's my definition of "something."

And you'd be amazed by what "joint" can cover in some divorces.

For example, was your name taken off the title to a marital home that was awarded to only one of you in your Judgment of Divorce? "Continuity of lifestyle" is one argument in favor of this—.

Check out "Credit and How it Affects Your Interest Rate" by Rock Financial for other arguments.

During one divorce mediation I facilitated several years ago, the husband quipped that perpetuating commingled liabilities post-divorce is akin to negotiating for a continuation of conjugal relations.

"Well, I'd give up serious money to avoid that," his wife retorted quickly. Emphasis on "that."

They both laughed.

Today they'd have access to even more information to help them make informed credit decisions out of divorce.

As of March 1st, Michigan residents can now get their credit reports for free, once every twelve months, from Equifax, Experian, and TransUnion (the three major reporting agencies — of which all may not, by the way, present the same view of your credit history).

In an interview with Paul W. Smith this past Monday, Detroit Free Press columnist Susan Tompor advised staggering your requests. Ask for a report from one company first, wait four months to ask for the second, then another four to ask for the third.

That way you'll keep a cost-free finger on at least the highlights throughout the year.

For further advice, you can read Ms. Tompor's detailed column of February 21 on line. Additionally, Clark Howard can help out in deciphering credit scores.

Alas — at least one consumer privacy group has come forward to suggest that the very act of requesting these financial documents to keep yourself protected will put you at risk. World Privacy Forum urges consumers to order their free credit reports by phone in order to avoid exposing themselves to "potential hazards."

Decide for yourself.