Home > 2013 > Credit Score

Should You Pay Off Your Ex’s Credit Cards?

Advertiser Disclosure Comments 1 Comment

When the Love Boat morphs into the Titanic and you are flailing in the icy waters of the North Atlantic, the banks are not rescuers, they’re sharks.  In other words, divorces can get messy — sometimes really messy — and it should come as no surprise that money is often at the root of the problem. Getting through the divorce is hard enough, but the money problems don’t always end when the papers are signed. In fact, joint credit card and other types of debt can very easily outlive a marriage.

We’ve heard plenty of stories wherein an ex has damaged the former spouse’s credit because of unpaid credit card and other debts. Here we look at one such cautionary tale:

As part of a divorce settlement, a friend of mine forfeited his equity in a home he had jointly owned with his ex, but couldn’t wriggle out from under the $100,000 that remained on their home equity line. You see, creditors, like a spouse’s divorce lawyer, are pretty old fashioned when it comes to the “till death do us part” thing.

So every month, my friend dutifully mailed his half of the minimum payment to her. She then made her payment through an automatic debit program at her bank — or at least she thought she had. But she hadn’t. She missed a few. Her credit score took a nose dive. His fell in lock-step with hers.

What does a hysterical ex-spouse do? As Monty Python would say, “Run away?” Well, basically, you have two choices: convince an unsympathetic lender to remove your name from the loan (achieving universal peace has a higher probability of success), or pay it off.

Casting for a Solution

He begged her to refinance. She was as unenthusiastic about that as the bank was about letting him off the hook. She needed reassurance that he would still stand up for his half. He agreed. They negotiated terms that protected her from nonpayment on his part, and she promised to refinance.

Unfortunately, a borrower’s willingness to refinance does not guarantee a bank’s willingness to approve a mortgage. As her credit score was a shade under 650, affordable refinancing was both unrealistic and unattainable.  That “till death do us part after we part” thing raised its ugly head. So, every month he held his breath at payment posting time.

Finally, when he could stand the stress no longer, he sought counsel from a friend and opened himself up to the concept of pro-actively managing both his and his former spouse’s credit. He looked at what actually makes up a credit score.

The 30% Solution

He learned that 35% of a credit score is based upon payment history. Other than making his payments in a timely fashion and reminding his spouse that it was in her best interest to make hers on time as well (a fact of which she was well aware), there was little he could do to directly control the outcome.

Then he focused on the next 30%: debt utilization. There was his opportunity.

He was running balances on a number of credit cards that put him almost at his credit limits. He thought carrying large balances, while making reasonable payments on time, would enhance his credit score because he was demonstrating that he could manage debt responsibly. Making on-time payments is in fact good for a credit score, but the closer you get to your credit card spending limits, the worse it is for your score.

When he recognized his mistake, he created the ultimate debt liquidation plan. In one payment he brought his credit card balances down to zero and his utilization ratio well below the 10% threshold. His credit score rose significantly.

Next, he was advised to send a note to the credit reporting agencies explaining that as a result of an automatic debit misunderstanding between his ex and a bank, a series of payments (over which he had no control) were reported as late to the credit bureaus. He went on to say that sufficient cash had been available (and remained) in the account to cover the ghost transfers.

Three months later his credit score was 776.

Helping Out to Move On

Unfortunately, his credit score was not transferable to his ex. She needed to refinance, but her credit was still lingering in the mid-650 doldrums. Her issue — beyond the late payments — was a $7,500 debt balance spread over a few credit cards, which she was forced to carry due to her inability to pay them off. That played a major role in pushing down her credit score.

My friend decided to pay off his ex-wife’s credit card bills using the “just in case” money he had set aside against the credit line. Her credit score began to rise. Then, she also sent in a note to the reporting agencies explaining the origins of the late payments. Time will tell if it’s as effective for her as it was for him.

So is there a happy ending? We don’t know quite yet. But here’s what we do know. He paid part of what he was obligated to pay under the divorce agreement a bit sooner than he expected but:

  • They both reduced their credit card debt.
  • Both of their credit scores increased.
  • She is more likely to get approved by the bank to refinance the house.
  • He is close to getting off the hook.
  • He is now the master of his credit score.
  • They are still friends.

Some people may not buy into this. I get it. First, it’s a lucky person who can afford to pay his or her ex some $7,500 in one fell swoop. Second, you just went through quite a process trying to establish a new life separate and apart from your ex and now I’m telling you to re-engage. Why?

Well, even if you don’t have the money to do it all at once, this is arguably a smart strategy. When you end a marriage and still retain joint liabilities under a mortgage, equity line or credit card, though you’re apart, you can (and will) be intertwined in a financial relationship for a very long time. Helping an ex pay off debt faster may be the quickest way to sever that relationship once and for all, and enable one, if not both, of you to begin a new, healthier phase of your life.

Image: iStockphoto

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • kd

    I took all of the ex’s debt in my divorce. I knew he wouldn’t pay it and I cared about my credit score and hoped to survive financially. I made as much $ as he did and we didn’t have children. However, I didn’t know about all the credit cards he took out at Lowe’s, Home Depot and three other bank credit cards, maxed out with my “electronic signature” behind my back, until the divorce. He had all the bills sent to a different address. I will never see the $400/month court ordered payment for half of those credit cards. Seems I am not alone. I recognized that my ex-husband didn’t have fiscal sense, but it really sucks that I was saddled with his debt. Yet, it is much better to be away from his spending, I make more $ now, and I’m almost debt free :)

  • Pingback: How Co-Signing Can Affect More Than Just Your Credit Score | Best Credit Repair()

  • Pingback: 7 Steps to Deal With Potential Employers Looking at Your Credit Report | Best Credit Repair()

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team