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Does Defaulting on Child Support Affect Your Credit?

Does Defaulting on Child Support Affect Your Credit?

The United States treats the paying of child support extremely seriously. Defaulting on child support payments will harm your credit rating if you don’t comply with the instruction.

Child support arrears that are unpaid for 180 days or longer will show up on your credit record. Making your payments on a timely basis is the best defense against this.

It is possible to petition the court if you can no longer meet your child support responsibilities. However, it would be best if you never stopped making the payments.

What Is Child Support?

The court may require a parent to pay child support (commonly known as child maintenance) after a divorce or dissolution of a family unit. In order to provide financial assistance to their child (or children’s caregivers, parents, state, or guardians).

An obligor pays child maintenance directly or indirectly to an obligee for the care and support of minor children from a relationship that has ended or never existed.

In fact, the obligated party is often a non-custodial parent. Thus, custodial parent, guardian, caregiver, or the state are all examples of obligees.

In some jurisdictions, they can require the custodial parent to pay support to a non-custodial one. And the one required to pay child support is the same regardless of gender. In other words, the obligation lies on both parents to support the other’s child(ren).

When both parents have joint custody, the child has two primary caregivers. And no non-custodial parents.

Typically, they force the higher-earning primary caregiver (obligor) to provide reimbursable payments. These payments go to the other primary caregiver (obligee).

However, there are some countries where the “non-resident” parent must pay a percentage of their income to the “residing” parent for their child’s support unless they can prove equal contributions.

In these jurisdictions, they do not consider either parents’ income or their needs.

Do Credit Scores Include Child Support?

Under several circumstances, credit bureaus receive reports on late payments. Credit reports might show a default for up to seven years, like a missed payment on a credit card payment.

Child support arrears might be brought to the attention of the authorities. Plus, defaulting on child support payments can significantly negatively influence credit ratings.

Credit bureaus use the information in your credit report to calculate your credit score. Thus, late or missed child support payments might impact your credit score. Which they can record on your credit report.

Anything reported to the credit agencies might influence your credit score. Which is a basic guideline to remember.

If you fall behind on your child support payments so much that they’re referred to collections, it might even hurt your credit score. You may have had to deal with medical bill collections in the past.

The Negative Impact of Support Payments

Credit reporting organizations track and report collections like they follow and report lending and borrowing accounts.

A collection on your credit record is likely if the state, city, or other entity sends your child support to a collection agency for collection.

A collection account may be included in your credit report and is sent to collections. Credit scores would list any collection accounts as severely unfavorable.

Collections can remain on the credit report for nearly seven years if they are not resolved, which can significantly impact your credit score.

There is no one-size-fits-all answer regarding the influence of child support collections. Delinquent child support might hurt your credit score if it is in collections on your record.

Loan Approvals Might Be Affected by Child Support Payments

There may be additional concerns with your credit and borrowing even if you keep up with your child support payments.

Lenders may view child support as a recurrent monthly expenditure that reduces your capacity to repay a loan. You may still be denied a loan even if you have a spotless track record of on-time child support payments.

It is common for lenders to look at variables like your overall income and other financial responsibilities to decide whether or not you can afford to repay a loan.

Debt-to-income ratio is a common term for this. Your ability to borrow money in the future may be hampered if you have to pay excessive child support.

Does Defaulting on Child Support Affect Your Credit?

If you owe child support, the law mandates that credit reporting bureaus put it on your credit record. Lenders and creditors may consider this information in the event of credit denial.

In addition, child welfare services receive information regarding the whereabouts of absent parents from creditors and lenders.

To avoid having child support arrears show up on your credit, an agreement with the child support agency must be made.

Credit reporting companies may be willing to withhold negative records if you pay part or all of the past-due support.

On the other hand, few child support agencies may be willing to agree to remove all evidence of misconduct. At a minimum, most people will mention that you have been an offender in the past.

To ensure your privacy, several jurisdictions mandate that child support agencies provide you advance notice before disclosing past-due information to credit bureaus.

The enforcement agency usually provides a fair chance to contest the accuracy of the information. Most states require agencies to disclose past-due debts surpassing a certain threshold.

Exclusion of Child Support Arrears from the Credit Report

There’s a chance that a missed child support payment may show up on your credit record for several years if you fail to make it.

Your credit score will not rise if you pay late child support. But your credit reports will show it as paid in full, which can help.

Your credit report will not be able to delete the inaccurate information from it. It’s possible to dispute an overdue child support payment on your credit record if you’ve paid it off and it still appears on your credit report.

Child support collection agencies may fail to disclose payments in a timely manner despite their best efforts to collect payments.

Follow These Steps to Eliminate Child Support Arrears from The Credit Record:

  1. Check to see if the account has been paid in full. Request a report from child support agency if you don’t have receipts for your payments.
  2. File a complaint with the credit reporting agencies. They must complete an investigation of the claim within 30 days. An updated copy will be provided if your disagreement results in the desired revisions.

Late payments will appear on your credit record; therefore, you must stay up with the payments.

Wrapping Up

We hope that we have answered your question: “Does defaulting on child support affect your credit?” If you don’t follow the instructions of the child support agency, missing payments will have a negative impact on your credit score.

If you are having difficulty paying child support and need it adjusted you should talk to a family law attorney before defaulting on child support payments.

Written by Spirit0ne

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