If you make child support payments as part of a divorce or other settlement, you may wonder how child supports affects your credit. The truth is, a missed payment can hurt your credit, and not paying child support for the long-term can have serious credit score implications.
Follow along to learn how it all works.
In many cases, late payments are reported to the credit bureaus. Like a missed credit card payment, the delinquency can stay on your credit report for up to seven years.
“Delinquent child support payments can be reported. If they are, the delinquent payments can have a very negative impact on credit scores,” Director of Consumer Education and Awareness at Experian Rod Griffin shared.
Your credit score is based on a formula using information found on your credit report. (Learn how to read your credit report.) Because missed child support payments can be reported on your credit report, they can influence your credit score. A good, simple rule to keep in mind is that anything that gets reported to the credit bureaus could impact your credit score.
If you become far enough behind on your payments that your child support gets referred to collections, that may show up on your credit report as well and harm your credit score further. If you’ve ever dealt with medical bills collections in the past, the experience may be similar.
Just like with lending and borrowing accounts, credit reporting companies follow and report collections. If your child support is sent to a collections agency by the city, state, or other agency, you can expect that collection to show up on your credit report.
*“If referred to collections, a collection account would become part of your credit history. Any collection account is extremely negative and would be reflected as such by credit scores,” *according to Griffin.
If not resolved, collections stay on a credit report for up to seven years – and that can have a significant negative result for your credit score. (Learn how to get collections removed from your credit history.)
Everyone’s credit history is unique, so the impact of child support collections may vary from one person to the next. But if it does show up in collections on your credit report, delinquent child support can affect your credit score.
Even if you stay current with child support obligations, you may have other issues to look out for when it comes to borrowing and your credit.
Child support may be considered a recurring monthly expense by a lender and decrease your ability to pay for a loan, in the bank’s eyes. In that case, you may be turned down for a loan even with a perfect on-time child support payment history.
When approving mortgages and some other loans, lenders look at things like your total income, housing expenses, monthly debt payments, and other monthly financial obligations to determine your ability to pay for a loan. (This is often called debt to income ratio.)
If child support takes too large a portion of your income, it can hamper your opportunities to borrow in the future.
While you may not harbor any positive feelings towards your ex, missing child support can have a ripple effect that harms both your ex's finances and your shared child. Even though paying child support is far from fun, hopefully the funds are being used to provide your child with a comfortable and safe environment.
Delinquent child support enforcement is a big deal, and back child support is not something you can just ignore. Not only because of the potential impact to your child, but also because of the potential impact to your own credit report and financial future.
In the long-term, someone with bad credit may have to pay hundreds of thousands of dollars more in borrowing costs over their lifetime than someone with good credit. To help avoid this, try to pay all bills on time – including child support – to keep them from showing up on your credit report in collections.
Like a short-sale, a collections history is a stain on your credit history. Preventing it in the first place is the best way to keep a potentially small financial issue from turning into a more costly, long-term problem.
You don’t have to write child support checks early, but you can take some steps today to pay off any child support debt and prevent it from returning in the future. For most child support payers, that typically includes setting a good budget and checking in regularly with their finances.
While ultimately, you should use whatever budgeting method works best for you (yes, even a written list if that’s your style!), there are tons of online and mobile tools available at no cost to help you out.
If you don’t already, it is a good idea to budget and monitor your money with a personal finance and budgeting app. Some popular options include Mint, You Need a Budget (YNAB), Personal Capital, and Clarity Money. Aside from YNAB, all of these apps are free to use.
If you do find yourself behind on child support, work with the child support enforcement team to keep it from going to collections. If you can, that’s the best thing you can do for your credit. If it’s already too late and sent to collections, work to resolve it quickly while taking other steps to solidify your credit and improve your credit score.
To summarize: In the short-term, when it comes to your credit and child support, late payments can be reported on your credit report and affect your credit score. If you get far behind and back child support gets out of control, it can go to collections and cause more serious harm to your credit score.
Eric Rosenberg is the creator of the Personal Profitability blog and podcast. He has both an undergraduate degree and a MBA in finance and his work has appeared in various media outlets.
Our goal at Self is to provide readers with current and unbiased information on credit, financial health, and related topics. This content is based on research and other related articles from trusted sources. All content at Self is written by experienced contributors in the finance industry and reviewed by an accredited person(s).
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