A good friend of mine recently asked me how she could improve her low (and still decreasing) credit score. In my line of work this is certainly one of the more common questions I receive. I found myself mentally preparing my normal suggestions. I was ready to discuss the importance of on time payments and keeping her credit usage low. But then, she threw me a curveball. “My credit score is low because of my ex boyfriend. I took out the loan for his car and when we broke up he stopped paying.”
My train of thought derailed immediately. I knew the history here and I knew it was unlikely this loan was the end of her taking responsibility for his finances. My gut was right. She revealed a couple other accounts which he ceased payment on when they split. Immediately I drafted a plan of action for her. I feel compelled to share this story because I know she isn’t the only one who’s been in this position. When a relationship comes to an end whether it’s a partnership, a marriage or something in between, untangling commingled finances is an emotional (and sometimes avoided) necessity.
When I realized the severity of this situation I started asking pertinent questions. I wanted to know what accounts he still had access to and if any bills weren’t being paid. She told me the car and their home were finally sold a few weeks prior. To her this meant that her liability also halted. Please, if you’re in a similar situation do as I instructed her and pull your credit report!
This link doesn’t take you to some affiliate site. We don’t receive a kickback for clicks. This is the website to use if you need to pull your credit report. The Fair Credit Reporting Act (FCRA) requires each of the three credit bureaus (Experian, TransUnion, and Equifax) to provide you with one free credit report each year.
***Due to COVID-19, you can now pull a free credit report from each of the bureaus once per week until April of 2021.***
Don’t be intimidated as your report can be dozens of pages long. We’re going to walk through this together. The first thing you’re looking for are the open accounts. Take a highlighter and note each account that is still active. Are there any accounts you didn’t know about? Are there assets in your name which you don’t possess? Are you a joint owner or any open lines of credit? If you answered yes to any of these questions you need to remove yourself from the accounts. There are a few ways in which you can be removed from joint obligations but it will depend on the type of account.
First, any accounts open in your name that you didn’t know about need to be disputed. Whether you know the person or not, if anyone opens an account in your name without permission it’s identity theft and needs to be treated as such. You can fill out an online form with each of the bureaus to contest the account. You’ll also need to contact the fraud department of the company where the account is located. Finally, file a report with the Federal Trade Commission’s (FTC’s) “Consumer Responses Center.”
Next, what about loans for assets you don’t possess like cars, homes, and boats? Removing your name from these accounts can be more difficult. If they are joint accounts the party who possesses these assets will need to refinance or obtain a cosigner release if they intend to keep the assets. Alternatively, the assets can be sold and any equity can be split. Removing your name from these joint obligations can be difficult if the other party isn’t cooperating.
Finally, if you’re a joint account holder on lines of credit, you’ll want to be removed from these accounts as well. If there isn’t a balance on the account you can simply request the account be closed. If there is an outstanding balance the account will likely need to be paid off before it can be closed. If you’re unable to pay off the balance you might consider a balance transfer to an account for which only you are liable. The balance transfer will allow the joint account to be paid and then closed. This transfer of ownership ensures that you will only be impacted by your decisions and not the decisions of the other party. You can also try and obtain a personal loan for the amount needed to pay off the outstanding balance.
When you’re finished with the above there is one more thing you’ll need to do. You need to freeze your credit. Especially, if you found accounts that were opened without your knowledge. You can freeze your credit with each of the three credit bureaus online by going directly to their websites (Experian, Equifax, TransUnion). It’s relatively easy to do and ensures no new accounts can be opened in your name. It’s the most effective way to ensure you’re protected from future fraudulent activity.
Working through this process will take some time. However, ensuring you are no longer liable for accounts which you don’t solely control will be well worth the work.