Repair Credit: How Do You Repair Credit After a Divorce?

Repair Credit, Divorce

Financial problems are the number one reason that couples seek counseling, and also one of the top causes of divorce. Did the end of your marriage leave you with less than sterling credit? Here are some ways to start to REPAIR CREDIT ratings and rebuild your financial life.

Adjust to Your New Budget

Chances are, you’ll be paying for more house with less money after your divorce. If you are keeping the house, you’ll be paying a mortgage on your own that used to come from two incomes. If you are finding a new apartment, you will probably find that it is more expensive to rent a place on your own than to share one.

To keep yourself financially healthy, add up income versus expenses and figure out where you can cut back. Some people, when income is reduced, rely on credit to make ends meet. But, if you have no immediate prospects to increase your cash flow, this can result in debt that you can’t easily pay. Instead of getting overextended, look at expenses such as health club memberships, cell phone contracts and other bills to cut costs before you wind up over your head.

Divorce Doesn’t End Financial Obligations

After the divorce, you will most likely share responsibility with any joint debt run up during your marriage. This is true even on joint cards where your ex ran up large balances without your knowledge and in violation of your divorce decree. Make sure that you know about all open accounts and standing balances, no matter how amicable your split.

Close as Many Joint Accounts as Possible

Call your creditors and have yourself or your spouse removed as a joint account holder or authorized user. No matter how agreeable you both are with one another during divorce negotiations, you need to legally protect yourself. If the accounts are closed or your ex is removed, you are safe from further debt being added.

As Much as Possible, Work with Your Ex

If one of you bails on an obligation to pay your share of the debt, it hurts you both. It can be awkward to continue to discuss joint finances with someone after a split, but, it will serve you both better in the end if you can tackle debt together.

Some couples find that the most equitable way to deal with old debt is to each keep a card that is only in his or her name and transfer a portion of the balance of shared debts to that card. That way, neither is harmed if the other is unable or unwilling to keep up with financial obligations.

Divorce is not pleasant for anyone. But, it does not need to destroy your financial future. By taking stock of your current financial situation and working to repair credit records, you can start the next phase of your life with a healthy financial outlook.

For more information on how to Repair Credit after divorce please click here to request a free consultation.

Free Annual Credit Report – How to get them.

Regularly checking your credit report is imperative to assuring your financial health. You will need to know your credit scores to know what sorts of mortgages you can realistically qualify for when you embark on home purchase plans. And, finding out what is wrong and fixing it is a vital part of the credit repair process.

Credit reports and credit scores used to be hard to find. You never knew what your score was or what information determined it. The Fair and Accurate Credit Transactions Act of 2003 increased transparency by requiring the three major credit reporting agencies to provide consumers with free access to their credit reports once a year.

To get your free annual credit reports, follow these steps:

  1. Visit the site While there are other sites that offer credit reports, this is the only official clearinghouse to get yours from all three credit bureaus for free.
  2. Provide the requested information. You will start by entering your state of residence, then identifying information such as your name, current address, previous address and Social Security Number.
  3. Once the site finds your information in the system, you will be prompted to provide some identifying information about your credit history. For instance, you will be asked which bank holds your car loan, and will have to select the answer from four options below. Do not feel alarmed if you are asked about accounts that you do not have. “None of the above” is one of the acceptable answers!
  4. Once your identity is confirmed, you will have the chance to visit each of the credit bureaus in turn. In between looking at your reports, you will return to Follow directions closely to avoid risk of inadvertently closing out your session.
  5. When you visit the sites to view your credit report, you will find that the information is organized a little differently on each. But, they will all contain information about your current loans, credit cards, past debts, and credit inquiries. Negative items such as bankruptcies and liens will appear in their own section.
  6. Study the information in the report carefully. Are there any errors? Are any of your credit accounts missing from the report? These can artificially lower your score, and you should dispute these items. A federal study in 2004 found that 79% of all credit reports contain at least one error.
  7. Be sure to print a copy of each report or to save it to your computer. You can save a copy by choosing “print” and then picking “Adobe PDF” as the printer. This way, you are able to consult the report repeatedly as you address any issues.

You are allowed to check your report free once per year. To remind yourself that it’s time to check your free credit report, try to link the date to an outside reminder. For instance, many people check their credit reports on the same day that they turn the clocks back each fall. By checking each year, you can keep yourself up to date on what your credit reports say and keep yourself aware of your own financial health.

FICO & Vantage Scores – Different Systems

Different Systems, Different Scores

Those three little digits that control so many of your financial opportunities. Your credit score can be pulled when you apply for a job, shop for insurance, during the home purchase process and in many other circumstances. But, it might surprise you to learn that there are actually a number of different agencies that create credit scores, and your scores will vary depending on which one is used. Some financial institutions even have their own internal credit scores that they use in place of independent ones.

Some of the most common credit scores used to determine your credit worthiness:


The FICO score is the one that people are most familiar with. It uses information from the three major credit bureaus to assign a three digit score that estimates credit risk. The score uses a number of weighted factors that include payment history, age of the accounts, ratio of available credit to debt, types of credit used and how recently you’ve searched for new credit. Your FICO score might vary depending on which credit bureau’s records are pulled to estimate your score.

Vantage Score

This credit score was created through a joint effort between Experian, Equifax and TransUnion. The advantage of the VantageScore is that your score is the the same no matter which credit bureau’s information is pulled to calculate it. The score can range from 501 to 990 and also comes with a letter grade. It has not been adopted by many creditors and is currently only used for about 6% of credit score pulls.

PLUS Score

This score was created by Experian to give consumers an easy to understand their credit health. It is not used by lenders; instead, it is intended as a consumer tool. The scoring range goes between 330 and 830, with a higher score indicating lower credit risk. Since this is not the score that creditors use when considering credit-worthiness, do not be surprised if your PLUS Score is different from the score that your bank says that you have.

TransUnion New Account Credit Score

This credit score is available for free from financial monitoring site Credit Karma. (As an aside: Credit Karma is a great resource for those undergoing credit repair. They allow you to check your credit score in real time and also to test what affect different actions will have using their credit score simulator.) The TransUnion New Account score is used by many lenders to decide how risky it is to extend credit to you. This score ranges from 300 to 850. It is based on information from TransUnion. It is made up of a number of factors that include the age of your accounts, our payment history and other factors.

Auto and Home Insurance Scores

These scores are used by the insurance industry to determine risk of a claim if you are insured by them. The results can affect the rates that you are extended when you shop for a policy. The scores range from 150 to 950. While the use credit scores for insurance is controversial, industry members defend the policy because of a correlation between credit scores and insurance risk.

How to Spot a Fraudulent Credit Repair Service – Education

If you are working toward a home purchase, it’s important to get your credit into the best possible shape. Credit repair companies can help, but, you need to pick one that will do the work that you want. There are, unfortunately, many unscrupulous agencies making promises that make oversized promises or ones that charge far more than they should. Here are some warning signs to look for when looking for a company to help you fix your credit:
  • They promise they can erase a bankruptcy. No company can erase a legitimate negative issue with your credit. If you encounter a company that promises that they can make a bankruptcy go away, they are not telling you the truth. Only time and responsible credit management can remove a bankruptcy from your credit history.
  • They say they can eliminate debt. No company can erase a debt that you legitimately owe. It is legal and possible to get erroneous accounts removed and to negotiate settlements. However, there is no magic wand that will simply make legitimate debts disappear.
  • They promise a new credit identity. If someone promises you a clean, new credit identity, they are breaking the law. When a company promises this, what they give you is a number that looks like a Social Security number. However, it is in reality an Employer Identification Number that has specific legal uses. It cannot be legally substituted for a personal Social Security number, and anyone who says that it can is putting you in danger of breaking the law.
  • They tell you to lie on credit applications. This is something that can leave you with expensive fines or worse and no honest company would do that. If you encounter a company that encourages you to be dishonest when applying for a home loan, do not do business with them.
  • They fail to explain your legal rights. When dealing with credit repair agencies, you have a few specific rights under the Credit Repair Organization Act (CROA). For instance, you have the right to cancel the service within three days without being charged. You have the right to know, in detail, what services they are offering. You are entitled to know how long the process will take. Any company that refuses to supply this sort of information is in violation of federal law.
  • They try to charge you before they’ve done anything to help. The CROA also forbids charging for credit repair before services have been rendered. If a company is looking for money in advance, this is a good sign that their service is a scam.

If you encounter any of the red flags above, walk the other way. These are clear signs of an expensive and ineffective credit repair scam. When it comes time to fix your credit so that you can move forward with home ownership dreams, entrust your financial future to a company that is reliable, trustworthy and has your best interests at heart.

For more information on legitimate credit repair services click here to request a free consultation.

What is an FHA Loan? – Tips

When you start shopping for a mortgage, the number of types available can almost be overwhelming. If you have gone through a bankruptcy or foreclosure or if you don’t have a lot saved for a down payment, one option to explore is an FHA loan.

What Is an FHA Loan?

FHA loans are backed by the Federal Housing Authority. The program was established in the 1930s in response to the massive number of foreclosures that occurred during the Depression. The guaranteed loans meant that lending was less risky for banks and mortgages more accessible. Since the loans are backed by the federal government, they are less risky for lenders. These loans can be a good match for people who have recently gone through credit repair. They require lower down payments and even people who have had serious credit issues such and bankruptcies and foreclosures can be approved.

What Are the Benefits of an FHA Loan?

An FHA loan requires only a 3.5% down payment. The money for the down payment can be a gift from a friend or relative, which can be a boon to young first-time buyers. FHA loans are often available even to people who have had bankruptcies or other credit issues.

Another interesting benefit of an FHA loan is that it is an assumable loan. What that means is that, when selling a house, the next owner can simply pick up payments where the last owner left off. This can make the house more desirable to buyers if you ever choose to sell.

Are There Drawbacks to an FHA Loan?

While FHA loans have a lot of qualities that make them an attractive home purchase option, there is also one big potential drawback to this sort of loan. Because an FHA loan has more lax requirements, it comes with hefty insurance payments.

To get an FHA loan, you’ll need two types of insurance. The first is an upfront mortgage insurance premium (MIP) that is equal to 1.75% of the mortgage. This is either paid at closing or can be added to the loan amount. The second is an annual mortgage insurance premium which is paid monthly. The cost of this insurance varies depending on the term of the loan and how much you are borrowing.

Do You Qualify for FHA?

FHA borrowers have to meet a number of requirements. Some are very rigid, but others can be worked around if the lender has justification. A few key qualifiers:

  • You must be over the legal age to sign a mortgage in your state and have a valid Social Security card.
  • You must be steadily employed. For the FHA, this usually means that you have been with the same employer for two years or more or that there are no gaps in your work history.
  • To qualify for the 3.5% down payment, you need to have a credit score of 580 or better.
  • You need to be two years out of bankruptcy and three years out of foreclosure.

FHA loans make home ownership a much more attainable dream. When looking for a loan, check all your options to find the one that works best for you.

For more information on FHA loans feel free to contact our office at 617-265-7900 or feel free to request a free consultation you can click here.

Why Your Credit Score Matters – Tips

Prior credit mishaps make many people gun shy; it’s understandable to want to live plastic-free if you have had trouble managing credit in the past. There are those who espouse the merits of a cash-only existence, and they have a lot of arguments that are sound. But, there are also many things that they miss. You may be surprised to learn that, even though you may never need or want a credit card, your credit score still has a huge impact on your life. A few ways a bad credit score can hurt you:

Why Your Credit Score Matters

While you definitely can get insurance with bad credit, it will cost you more. According to, bad credit can cost you up to 10% extra in car insurance premiums. Over a period of years, this can add up to thousands of dollars. When you raise your credit score, this frees up cash every month while providing you with the same level of coverage you had before.

Higher Deposits

Having bad or no credit means having a lot more of your cash tied up in deposits for services. Without good credit and a history of paying utility bills on time, getting electricity or water turned on at your place can cost you the equivalent of two months worth of bills. When you rent a car with a debit card instead of a credit card, you could be required to tie up hundreds of dollars of your own money during your trip. You may even be required to put down a deposit for a cell phone with some providers.

Losing Out on Job Opportunities

In these unstable financial times, more and more employers are checking applicants credit scores when making hiring decisions. Many believe that a good credit score is a sign of a more stable and conscientious worker. Whether that holds true or not, the belief itself can keep you from getting the job you want.

Escaping from Renting

A home purchase is generally seen as one of the best ways to build stability. When you rent, your cash disappears down a hole every month; when you own your own home, part of what you spend each month goes back in your own pocket in the form of home equity. And, owning a home can make retirement much easier since you’ll either have a paid-off place or saved up cash to build your lifestyle.

But, buying a home is almost impossible without a good credit score. Those with poor credit usually have to come up with much larger down payments if they are approved for a loan at all. And, the interest rates that are available to someone with less than sterling credit are higher, meaning tens of thousands of dollars down the drain over the years.

Having a good credit score is about much more than access to credit cards. It can affect your opportunities and your quality of life in dozens of different ways. If your score has taken a hit because of mistakes in the past, credit repair can help you fix it and improve your chances in life.

For more information on our company and services feel free to contact our office by dialing 617.265.7900 or requesting a free consultation.

Lights, Camera, Action! – Plans that work!

Being a credit repair superstar is more than just deleting negative entries. Our clients and loan officers use our service for our expertise in understanding how the credit algorithm works and how it can be adjusted in the shortest period of time possible. When someone requests a FREE consultation with our company they will get a clearly defined

“Action Plan” that not only consists of removing negative entries but also consists of credit tips, advise on how to deal with debts, how to open up new trade lines & more. As always free to forward us any scenario/client that you think could benefit from a free credit evaluation. We would love to help them strategically rehabilitate their credit! Nik President, Key Credit Repair 617-265-7900 Main Line