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Julie, a 20 year recent full time college student, married Bert, a 24 year recent medical clerk. On the day she signed their marriage license, her credit report score began to worsen.

Julie knew Bert had been previously married, and though that marriage had lasted solely two years, it had been long enough to spread a unhealthy credit virus onto her and Bert's joint credit report score.

Bert's ex-spouse, Camille, already had delinquent credit before she married Bert. And, she had continued being delinquent throughout her wedding to Bert and after the divorce. Unbeknownst to Bert, Camille's bad credit had passed onto him when he married her, and then passed on to his new bride, Julie.

Why? As a result of when couples marry, assets; plus debts, become joint. Unfortunately, divorce does not nullify monetary obligations, even if a choose specifies in a very divorce decree that spouse is responsible for re-paying which bills.

However this is often just the start of Julie and Bert's dangerous credit horror.

Julie had racked-up several thousand greenbacks in student loans. After she married Bert, she dropped out of faculty which action initiated the loan compensation period. Like Bert, she also includes a full time job, but it's hard to pay the debt as a result of of different bills.

In the divorce decree with Camille, Bert retained possession of the car which still had loan payments due. Camille received all the furniture in the divorce settlement. Bert and his new bride, Julie, had to purchase new furnishings for his or her apartment. Additionally, they had spent a heap of cash on their wedding and honeymoon. Together they'd a heap of debts to repay, and a few bills were being paid late. Their credit score continued to dive.

They got an idea. They might balance transfer Julie's credit card and Bert's mastercard to a new credit card that offered zero interest balance transfers for the first six months. Unfortunately, since their credit score was unhealthy because of excessive debt-to-income ratio and late payments, they were rejected by the card issuer.

Bert refinanced his car to lower the monthly payment. Since his credit was dangerous, he had to extend the term (compensation length) of the loan a further two years and at a higher interest rate than the initial loan, however he was ready to urge $1,000 in equity. He and Julie used the $one,000 to compensate for their bill payments.

Six months later, now that they'd trapped on their payments that also lowered their overall debt-to-income, they reapplied for the zero intro balance transfer credit card and were accepted. They transferred their credit cards to the 0 intro card.

3 months later, they received a letter from the new card issuer that stated their zero interest amount had been terminated. Why? Because Julie and Bert had mailed an auto loan payment some days late. The late payment was reported by the auto lender to a credit reporting agency which lowered their credit score. The new card issuer's terms needed Bert and Julie to take care of (or improve) their credit score by making all payments (not simply payments on the card) on time. Additionally to terminating the zero interest period, the issuer conjointly increased their APR rate.

Different than ordering credit reports before wedding, what might Bert and Julie have done differently to avoid the dangerous credit virus?

Before divorcing Camille, Bert ought to have created positive all debts assigned to her would be repaid, and repaid on time. Clearly, the only positive method to possess done this could have been for Bert to create the payments himself. He might have refinanced his auto after divorcing Camille, used the equity to payoff her debts, and then have her repay him. He should have conjointly ensured that every one joint accounts with Camille had been closed to prevent extra charges.

Julie ought to have continued her full time student standing; not solely to improve her career opportunities, however additionally to delay the student loan reimbursement requirement.

And there are obvious things Bert and Julie could have done, like shopping for used furniture whenever they had on the market money rather than charging purchases for brand new furniture on their credit cards. Additionally, they may have spent less on their wedding and honeymoon.

Marriage and joint debts can indeed spread dangerous credit like a virus. Don't rely on a divorce decree to separate you from unhealthy credit.

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