Maintaining your credit score through a divorce
According to the Office for National Statistics, it’s estimated that 42% of marriages in England and Wales end in divorce, a very sad and sobering statistic for the many couples who are currently married in the UK. As we can see it is quite common for marriages to breakdown and it is also well-known that marriage breakdowns are a huge source of stress and upset for all of the people involved. On top of this stress they are also incredibly expensive – invariably to both parties, especially when the lawyers get involved.
There is however a hidden factor of divorce that can affect the finances of both parties – credit scores. In most marriages, finances easily become intertwined, with joint bank accounts, credit cards and personal loans being commonplace. In most cases, the couple may even have a loan together in the form of a secured loan or a joint mortgage, both of which can cause headaches in the event of a house sale.
The first step to protecting your credit rating when going through a divorce is to obtain a copy of your credit report and then let credit reference agencies know when you divorce or legally separate. If there are no active joint agreements still in place, then it is easily possible to remove any financial links that you may have with your ex.
There are also some additional steps that can be taken in order to ensure a clean financial ‘break’. If you do still have some joint agreements in place then you should take the time to close any accounts for which you are a joint owner, signatory or authorised user. If your ex still wants to maintain a particular agreement, it is important that you have your name permanently removed from the account in question. Any unwillingness to settle agreements or amend account ownership, or make payments could result in negative impact on the credit reports of both parties, so this is one step that should not be ignored.
As traumatic as a breakup can be it is important that you get your finances in order going forward as a single person in order to maintain a good credit rating. Setting up a budget for your new lifestyle is a great way to maximise your chances of staying on the financial ‘straight and narrow’. It’s likely that your outgoings will have changed, and you will now be living off your own income. Expenses that were perhaps shared previously are now yours and yours alone. It can be a good idea to frequently check your credit report and indeed it’s now possible to subscribe to monitoring services that automatically notify you of any changes.
Then we also have to deal with the emotional side of things. As counter-intuitive as it may be, it pays to be as civil as possible, and for both parties to work together in severing all financial ties. This way, you can avoid being financially ‘married’ to your ex long after the divorce is final.