Divorce and Credit scores

[clifp]

A friend of mine is is the process of separating from his wife. I think their marriage is likely to end in divorce but who knows. Right now he and his wife are on pretty amicable terms.

He wants to help his girlfriend get an expensive car by cosigning for her loan. The girlfriend doesn't have good credit and probably won't qualify for the car without his signature.

My questions are as follows.
A. Can he cosign for a loan without his wife's permission or knowledge?
B. Is there way he could cosign for the loan without affecting his wife credit. (e.g. if he and the wife were legally separated could he cosign)
C. What impact would cosigning for a loan have on his credit score how about his wife's.
D. If his girlfriend defaults and/or miss car payments what would the impact be on his and his wife's credit scores.

 

[W2R]

I don't know the answers to your questions, but I would suggest that he apply for any credit he may need before the divorce, not after. From my own experience, anyway, my credit was essentially non-existent after my divorce.

That was aggravating, considering that I was the one who managed our finances during the marriage and built up our credit score to begin with. My ex couldn't even write a check, and had no idea of what bills we needed to pay.

Four years after my divorce I bought a house, and suddenly my credit was golden once again and the credit card offers re-appeared in the mail and so on.

 

[lets-retire]

I second Want2retire's post as far as the credit going to bits during a divorce. It is not uncommon, I talk to many people who can trace their credit issues back to divorce.

As far as your other questions:
A, B: Credit reports are actually separate. Meaning even on a joint loan the account is reported to each persons credit report separately. There is no such animal as a joint credit report. Whatever your friend wants to sign or not sign is none of his wife's business.

C: This one is a bit tricky, because FICO is very unclear and subjective. I've heard some creditors actually lower you score by obtaining a loan form them. These are normally the "high risk" creditors or creditors of last resort. The one thing I can say for certain is it won't have any effect on his wife's score.

D: The impacts would be the same as any other defaulted loan for him. His wife's credit would not take any hits.

I might add that if the divorce is contentious he might not want to cosign anything, especially if the girlfriend is not known to the wife.

 

[travelover]

............
He wants to help his girlfriend get an expensive car by cosigning for her loan. The girlfriend doesn't have good credit and probably won't qualify for the car without his signature.................

Danger! Danger! Mr. Robinson!

 

[youbet]

A friend of mine is is the process of separating from his wife...... He wants to help his girlfriend get an expensive car by cosigning for her loan. The girlfriend doesn't have good credit and probably won't qualify for the car without his signature.

Since your friend is doomed to a life of extreme agony, frustration, gloom and doom, perhaps you should do him the favor of just shooting him and putting him out of his misery. The above scenario is worse than a death wish.

 

[maddythebeagle]

Usually...these posts with, I have a friend...are really the OP Your "friend" will end up on Judge Judy after the girlfriend breaks up with him and stops making payments.....as others have said, you (err...your friend) and the wife have seperate credit reports....the issue with divorce is joint accounts, which always should be taken care of by removing the other person or simply closing accounts...

I frankly am amazed that people are suckered into co-signing on a loan for somebody with bad credit...

 

[cute fuzzy bunny]

Ah yes, I remember my days of thinking with the brain thats allegedly found in the smaller head.

M. Girlfriend disappears with car and stops paying, sticking friend with the payments. Wife finds out about all of it somewhere along the way and that cements the divorce. And it aint amicable any longer. Guy finds himself living in a one room efficiency apartment over a convenience store with a flickering neon light right outside his window.

N. Guy decides what he wants to do about his marriage before making a significant financial risk with someone he may not know very well at a time when he can probably ill afford two financial setbacks, then sees how the girlfriend thing works out, then when the dust is settled and he has his own finances in order and they're separate from the innocent bystander (wife), reconsiders buying the girlfriend an expensive car.

 

[Nords]

A friend of mine is is the process of separating from his wife. I think their marriage is likely to end in divorce but who knows. Right now he and his wife are on pretty amicable terms.
He wants to help his girlfriend get an expensive car by cosigning for her loan.

I think I can see one potential source of marital friction here. Maybe they could sort things out by letting the wife cosign the girlfriend's car loan?

I frankly am amazed that people are suckered into co-signing on a loan for somebody with bad credit...

I wonder exactly how the guy thinks the girlfriend is going to reciprocate. Does the car loan buy her continued acquiescence? Is it intended to be a sign of his financial commitment to her, even though apparently his wife still has a higher emotional/marital commitment? Is it just a blatant [-]blackmail[/-]commercial transaction of material items for continued silence? Is a car perceived to be a better deal than gem equity?

Usually...these posts with, I have a friend...are really the OP Your "friend" will end up on Judge Judy after the girlfriend breaks up with him and stops making payments.....as others have said, you (err...your friend)

Cute insinuation, Maddy-- but you've been paying enough attention to his posts to know that ClifP's not married, right?

 

[limpid lizard]

I'd encourage him to buy the most expensive car he can sign for. He should also sign an expensive lease for her, go into hock for jewelry etc..

 

[W2R]

Ah yes, I remember my days of thinking with the brain thats allegedly found in the smaller head.

M. Girlfriend disappears with car and stops paying, sticking friend with the payments. Wife finds out about all of it somewhere along the way and that cements the divorce. And it aint amicable any longer. Guy finds himself living in a one room efficiency apartment over a convenience store with a flickering neon light right outside his window.

And no credit at all (so no ability to rent a nicer place, even with money in hand), and creditors calling him all night long for bills his ex-spouse said she would pay as part of the divorce agreement, and swears she paid.

N. Guy decides what he wants to do about his marriage before making a significant financial risk with someone he may not know very well at a time when he can probably ill afford two financial setbacks, then sees how the girlfriend thing works out, then when the dust is settled and he has his own finances in order and they're separate from the innocent bystander (wife), reconsiders buying the girlfriend an expensive car.

And wonders why he would feed a gold digger like that anyway, now that he is divorced and available? There are LOTS of extraordinarily attractive fish in the sea and no matter how much of a dweeb he is, he could do better.

 

[travelover]

Momma said "Remember that's a downspout not a compass"

 

[FinanceDude]

A friend of mine is is the process of separating from his wife. I think their marriage is likely to end in divorce but who knows. Right now he and his wife are on pretty amicable terms.

He wants to help his girlfriend get an expensive car by cosigning for her loan. The girlfriend doesn't have good credit and probably won't qualify for the car without his signature.

I would say with certainty his marriage WILL end in divorce if he has a GIRLFRIEND already, don't you think??

My questions are as follows.
A. Can he cosign for a loan without his wife's permission or knowledge?

To my knowledge, NO, unless he is legally seperated....

B. Is there way he could cosign for the loan without affecting his wife credit. (e.g. if he and the wife were legally separated could he cosign)

I am thinking yes, but maybe Martha knows........

C. What impact would cosigning for a loan have on his credit score how about his wife's.

It helps the girlfriend's credit but could lower his score if she is late with payments..........

D. If his girlfriend defaults and/or miss car payments what would the impact be on his and his wife's credit scores.

Bad, and depending on which state, the wife could raise heck with the soon to be ex or his new girlfriend........

Just an aside, your friend is NOT legally seperated, HAS a girlfriend. and is trying to impress the "new squeeze" by buying her an expensive car under his wife's nose?

Sounds like your friend is heading down the scary: "what's mine is mine and what's YOURS is mine too" divorce path.............

 

[Sue J]

If he co-signs the loan for the GFs expensive car (that she obviously cannot afford) and then goes back to the wife and they do not divorce, the now ex-GF has a fantastic tool for revenge. Just stop making payments and ruin the ex-BFs credit.

Instead of co-signing for the loan, he could buy a car and loan the car to the GF. That way if he goes back to the wife at least he could give her the slightly used car as a make-up gift.

Seriously, sounds like the man has a few character flaws. Does the GF with the credit problems happen to look like his wife did 20 years ago?

 

[haha]

I'm with YouBet. This guy should just go to a local hospital and ask that his organs be harvested pronto, while there is something to harvest.

This sounds like a Sopranos episode teaser. Is the GF perchance a Russian emigré?

Ha

 

[FinanceDude]

I'm with YouBet. This guy should just go to a local hospital and ask that his organs be harvested pronto, while there is something to harvest.

This sounds like a Sopranos episode teaser. Is the GF perchance a Russian emigré?

Ha

He's going to end up like a certain Mr. Bobbit..........

 

[Callie]

I wouldn't co-sign for anything for ANYONE, unless I planned to make the payments myself. Huge mistake.

And if his wife finds out about this, there is a reason for the *amicable* divorce to quickly become a nasty one.

 

[Tadpole]

A friend of mine is is the process of separating from his wife. I think their marriage is likely to end in divorce but who knows. Right now he and his wife are on pretty amicable terms.

He wants to help his girlfriend get an expensive car by cosigning for her loan. The girlfriend doesn't have good credit and probably won't qualify for the car without his signature.

My questions are as follows.
A. Can he cosign for a loan without his wife's permission or knowledge?
B. Is there way he could cosign for the loan without affecting his wife credit. (e.g. if he and the wife were legally separated could he cosign)
C. What impact would cosigning for a loan have on his credit score how about his wife's.
D. If his girlfriend defaults and/or miss car payments what would the impact be on his and his wife's credit scores.

Sounds like the best situation your friend could be in. He tells her NO and she goes away and he doesn't end up with a second divorce in a couple of years because of her bad credit habits which remain with him past the second divorce.

 

[clifp]

I loved the comments pretty funny, or they would be if the situation wasn't so sad.

This really is a friend of mine since I am single and based on stuff like this likely to remains so!. I know all parties involved and the wife and the GF actually are/were? friends. The wife is being extraordinarily reasonable about the whole situation, which is actually even more complicated than I described. At least a movie of the week calibre.

However, what I am reading is that as long as he co-signs for the loan and doesn't involve the wife, his wife's credit rating should be unaffected. On the other hand want2retire experience that her credit suffered right after divorce seems really common.

So let me ask slightly different question. Are there any tips people have for a couple getting a divorcee regarding their credit rating? Sounds like closing joint accounts is on the list anything else.

 

[cute fuzzy bunny]

The wife is being extraordinarily reasonable about the whole situation

Uh oh.

I think the biggy on the credit rating is that a whole bunch of it is based on the length of the longest open accounts and the ratings on those. When you get divorced and close the joint accounts, those disappear and only your individual accounts fully 'count'.

 

[W2R]

I loved the comments pretty funny, or they would be if the situation wasn't so sad.

This really is a friend of mine since I am single and based on stuff like this likely to remains so!. I know all parties involved and the wife and the GF actually are/were? friends. The wife is being extraordinarily reasonable about the whole situation, which is actually even more complicated than I described. At least a movie of the week calibre.

However, what I am reading is that as long as he co-signs for the loan and doesn't involve the wife, his wife's credit rating should be unaffected. On the other hand want2retire experience that her credit suffered right after divorce seems really common.

So let me ask slightly different question. Are there any tips people have for a couple getting a divorcee regarding their credit rating? Sounds like closing joint accounts is on the list anything else.

Unfortunately, it's not simple. I could only wish it had been! Creditors get really nervous in a divorce, and they all want to be first in line for whatever money you have, and it doesn't matter if you have had a sterling credit history and continue to pay reliably. It might help a little to pay off every cent you owe everybody before you divorce, and to eliminate any need to borrow anything from anyone for several years.

Truthfully, I don't personally know anyone who has got through a divorce with credit unscathed; even those with no loans outstanding seem to have a harder time getting credit for a little while. The divorced women I've known took a much bigger hit on their credit than their ex-husbands, for whatever reasons. Maybe that is due to lesser income, or maybe other reasons.

ETA: I think CFB made a good point! That is probably a lot of it. We only had joint accounts. On the other hand, my daughter (aged 18 at the time, and in college) got several offers for credit cards each month that were delivered to the house. I needed a CC, but could not get one despite 23 years of nearly perfect payment records. She had never even balanced a checkbook, much less made payments for anything.

 

[haha]

So let me ask slightly different question. Are there any tips people have for a couple getting a divorcee...

This gets juicier every time you post. Keep 'em coming, ya here?

 

[Nords]

When you get divorced and close the joint accounts, those disappear and only your individual accounts fully 'count'.

Hunh. 21+ years of marriage but spouse and I have never had joint credit-card accounts. We don't even have a joint checking account, although we hold the assets in our ER portfolio jointly.

Of course this started back in the 1980s when one of us would be in the western Pacific and the other would be several time zones away. We felt it was better to each have our own individual cards so that we didn't have to try to track each other's charges before hitting a limit.

For some reason spouse now has a higher credit rating than me. Maybe it's because she actually has a W-2.

 

[cute fuzzy bunny]

Cool. You're good to go.

Now all you need is a girlfriend that wants an expensive car...

 

[growing_older]

So let me ask slightly different question. Are there any tips people have for a couple getting a divorce

First, don't acquire a girlfriend until your divorce is really final. If there was any intention or possibility of reconcilliation it will certainly be made more difficult. In fault states you could be materially hurting your case, in non-fault states you could be establishing a pattern of behavior that could be used against you later if you end up in court. Even more so if kids are involved.

Second, try for a non-adversarial split and divorce agreement if that's where you are going. There are mediators who specialize in this. Lawyer fees can easily exceed the value of what you are haggling over.

Third, no agreements count for anything except the final decree.

Fourth, I suggest you try to be honorable, but don't trust that your soon to be Ex will be. Divorce and money both have a way of bringing out the worst in people sometimes. Try not to stoop to that level if you find yourself in negotiating hell, but equally try to be alert for bad faith. Note: some lawyers seem to think it is their job to try being as adversarial as possible, up to and including dirty tricks. If you see that developing from either side, you'll want to try to cut it off before it gets out of hand.

(Beware, there are financial complications such as tax treatment of different kinds of assets that most divorce lawyers and even financial planners don't understand and will confidently steer you wrong.)

Fifth, if there are kids involved their welfare should take precedence, but very few adults (especially divorcing adults) seem to be able to make the leaps involved to understand that.

And --- nothing about divorce --- as a general rule, co signing a car loan is a bad idea. If the would be buyer cannot swing the credit to qualify alone, then they should consider another vehicle. Aside from the rare instance where a co-signer is helping a young adult get credit established, this should be a red flag. In a divorce (actually separation and a girlfriend on the side) this should be unthinkable.

 

[SecondCor521]

clifp,

A couple of comments:

1. As previously said by other folks, your friend is an idiot to co-sign. Editorial comment: He's also an idiot for having a girlfriend before he divorces his wife. Sorry, that's sort of a hot button for me.

2. As odd as this may sound, in my state, Husband could co-sign the car loan for Girlfriend and it would be considered a marital debt of Husband and Wife, thus obligating Wife to effectively pay off half of the Girlfriend's car. This can lead to some "mutually assured destruction" scenarios. (I live in a community property state.)

3. My credit score was nearly 800 immediately and I bought a house approximately two weeks after my divorce was final. The difference in my case is that all of the credit cards, loans, and mortgages were either joint or mine, and the few joint accounts I ended up having to close didn't affect me much. I think for women divorce could easily harm their credit more unless they follow Nords' approach.

Things to do to protect your credit in a divorce:

1. Make sure all payments are made on time even through the divorce.
2. Convert any joint accounts to single accounts in your name if possible. If conversion isn't possible, immediately freeze accounts to new charges and then close the accounts. Communicate to the STBX what you're doing and why, and be reasonable, if you're still trying to be amicable about the divorce.
3. If you don't trust the STBX, consider a credit monitoring service where you can see if she's opening credit cards in your name.
4. To the degree possible, get all of the marital debt either paid off or assigned to you in the divorce decree. That way, the STBX can't ruin your credit by failing to pay on a loan or debt that is in your name but was assigned to her in the divorce decree.
5. Remove the STBX as authorized user on any cards.

2Cor521