LIFE EVENTS AND CREDIT

HOW PERSONAL EVENTS CAN AFFECT CREDIT

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Death of a Spouse

Credit and Debt Issues May Arise

Stabilizing your credit in the event of a death can be difficult, especially if your spouse held all the credit in his or her name.  While resolving your financial affairs Keep in mind:

  • Community property states – credit accounts opened during marriage are automatically held jointly. That means you are still responsible for any debt that your deceased spouse incurred.
  • Paying bills is critical
    • On-time bill payments during the next 18 to 24 months are important in order to maintain your credit
    • Even one late payment can affect your ability to get a loan or credit card
  • Help is available
    • The nonprofit National Foundation for Credit Counseling (NFCC), 1 800 388 2227, can help you establish a budget and repay creditors, other organizations offer quality credit counseling as well.
    • Be sure the organization you work with is non-profit and provides budgeting and financial management in addition to a debt management plan, and does so at little or no cost.
    • Be cautious of any organization that claims it can provide a quick fix to your credit problems, suggests you don’t pay all of your bills, provides you with no financial management education or charges substantial fees
  • What happens to a spouse’s credit report when he or she dies? By law, a creditor cannot automatically close a joint account or change the terms because of the death of one spouse. Generally, the creditor will ask the survivor to file a new credit application in his or her own name. After reviewing the new information, the creditor then will decide to continue to extend credit or alter the credit limit. You might want to open a new credit account in your name. When doing so, keep in mind that you must use only your name when applying. Including your deceased spouse’s name will result in a joint account. Experian® automatically updates its records with periodic reports from the Social Security Administration. When the update is made, your spouse’s credit history will be flagged to show that he or she has passed away and his or her name will be removed from any preapproved credit offer mailing lists.

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