Child Support & Credit Score

Child support payments won’t affect your credit report and score unless you fall behind on your payments. If a collection agency gets involved, your credit score could drop significantly. Not only that, you could be sued or even arrested for the payments you missed.

Credit Report and Score
Child support payments do not show up on your credit report whether you’re making or collecting them. Making regular child support payments won’t improve your credit score.

Falling behind payments can be reported to the credit bureaus, and might adversely affect your credit report and score.

If a collection agency gets involved, the collection account will most likely be reported to the credit bureaus. If you get sued in court, that information may show up in the Public Record Information part of your credit report (in some states). While collection accounts remain on your report for 7 years, public records remain longer – up to 10 years. A collection account can lower your credit score by 50 to 120 points!

How delinquent child support payments affect your credit report and score depends on how you’re making the payments. If you’re making your monthly child support payments directly to your child’s other parent, then a late or delinquent payment is not likely to be reported to your credit report (at least until the custodial parent contacts an independent child support collection agency for assistance or files a lawsuit).

However, if you’re making your monthly child support payments to a state child support agency or a third-party child support collecting firm, any delinquency is likely to be reported to all three major credit bureaus and will adversely affect your credit report and score. A single late payment can lower your credit score by 50 – 120 points!

Federal law mandates that States child support agencies periodically report the names of noncustodial parents who have delinquent payments to the credit bureaus if the amount owed is over $1,000. Reporting of smaller debts are at the child support agency’s discretion.

Applying for Credit
While making child support payments can lower your chances of getting approved, collecting payments may actually get you better terms. Here’s how:

If you’re making child support payments, most lenders calculate your monthly payments into your debt-to-income ratio (DTI). A higher debt-to-income ratio lowers the chance that you will be approved for a loan, and if you are approved – will get you lesser terms. You may also be required to bring any back payments owed up to date before getting approved.

On the flip side, collecting child support payments may improve your chance of getting approved and can get you better terms, because lenders are allowed to use child support payments as an income factor. This will lower your debt-to-income ratio, which is good.

You will however be required to show that you receive the payments as part of a court judgment, and that the actual payments have been received on time for at least 6 to 12 months prior to the credit application.

Other points of interest
You should keep in mind that failing to make your child support payments on time can result in much more serious consequences than damage to your credit rating. Depending on your state laws, you could lose your driver’s license, have your passport revoked, have your wages garnished, bank accounts levied, or even receive jail time. The federal government may also deny any other federal benefits you are entitled to.

What to do if you’re struggling to meet payments
If you are struggling to pay your court-ordered child support payments, communicate with your child’s other parent or with the agency to which you are required to make the payments to try to work out alternative payment options.

If your financial situation has changed, for example you lost your job, you can petition the court to modify your child support obligations on a temporary or permanent basis. Consult with an attorney who specializes in domestic relations law if you need assistance in seeking a modification to your child support order.