When Tony and Lisa said, “I do,” they agreed to share everything. What Lisa wasn’t prepared to share was Tony’s penchant for late payments and over-drafted accounts.
However, the reality is, mixed credit marriages occur often. Mixed credit marriages is when one spouse has a significantly more favorable credit score than the other. Both parties need to be prepared to meet the challenge of cleaning up past mistakes and building a stellar credit score together.
Let’s explore Tony and Lisa’s journey towards improving their mixed credit scores and securing a mortgage to buy their dream home. Their goal is to save up for a down payment and purchase a home in three years.
Lisa quickly determined Tony’s lack of organization was the primary culprit for his ongoing financial struggle. He would misplace bills, and this led to late fees. Also, he failed to keep track of his checking account balance which resulted in overdraft fees.
Lisa and Tony came up with the following plan to combine and organize their finances. First, they converted every account possible to electronic bill pay. This would ensure timely receipt and payment of most of their bills. They created a new email account specifically for their electronic bills. Tony and Lisa then changed their individual billing email addresses to the new email account address. This ensured notices would not get lost in spam or overlooked in Tony’s personal email account.
Next Lisa bought an accordion file for any bills that arrived by US mail. This ensured the bills were kept organized and in one central location. Each Sunday morning Lisa paid any bills that arrived by mail the previous week.
Pull Your Credit Reports
It is a great idea to pull your free credit report at AnnualCreditReport.com each year. When you are trying to clean up past credit mistakes, it’s a must!
Neither Tony nor Lisa had looked at their credit report in years. Tony knew he had several accounts in collections that would need to be addressed. Lisa assumed her credit report was fine because she always paid her bills on time. Lisa was surprised to find an error on her credit report. There was a collection account listed that was not hers. This caused her credit score to take a significant hit.
Now that Lisa and Tony knew the information contained in their credit reports, they were prepared to act.
Clean Up the Mess
Tony went to work immediately to address the accounts he had in collections. Since the total owed was a significant amount he decided to contact a non-profit credit and debt agency for help. They were able to assist him in setting up a repayment plan with the collection agencies. He was able to make affordable monthly payments through a custom debt management plan and is now on-track to pay off his collection accounts in only 22 months.
Lisa also took steps to fix the error she found on her credit report. She was able to follow the simple steps detailed on the Consumer.FTC.gov website to file a dispute. Within 30 days the credit bureau responded notifying Lisa they had investigated and removed the error from her record. Since there was a mistake on her report, she was entitled to a second free credit report which she ordered to verify that the mistake was corrected.
It Takes Time
Lisa and Tony are now on their way from “mixed credit” to building the credit reputation it will take to secure a home mortgage. It took hard work to get organized and clean up past mistakes. But through teamwork Tony and Lisa took the actions necessary to pursue their shared dream of home ownership.
The journey isn’t finished. It will take some time for Tony to rehabilitate his credit score. But since he acted now, the estimated 22 months to repay his delinquent debts, fits their timeline for home ownership in three years.
I asked what lesson they learned through this process. Tony immediately spoke up, “The urgency to take action. Don’t keep putting off your debt problems. That is what I did for years. Yes, it took some time and energy to get organized and put a plan in place. But I feel so much better now.”