Can Divorce Impact Your Credit Score?
05 October 2017
The fact that you're divorced won't affect your credit score – but the financial situation of your ex-spouse could, especially if your matrimonial finances were shared during the time you were married.
Divorce and Credit Score
During a relationship, it's normal for your finances to become entwined. You might have a mortgage in both your names, have a joint bank account or take out a loan together. If so, this will cause you to become financially associated with each other.
When you're financially associated with another person, it will show up on your credit report. This can either have a positive or negative impact on your credit score, depending on whether the other person has a good credit history or a bad one.
What you might not realise is that if you separate or get divorced, this financial association will continue – even though you aren't in a relationship anymore, and even though the bank account (or whatever shared finances you had) has been closed.
This might not be a problem if your ex has an excellent credit rating. But this won't be the case for everyone, and you might not want to leave yourself in a position where your ex's financial situation has a direct impact on your credit score.
This is particularly true when you consider that divorce or separation is often an expensive exercise. Not only are there legal fees to pay, there's other associated costs, such as buying or renting a new home or paying maintenance.
Therefore someone who is traditionally very good with money may find themselves struggling financially. And if your ex finds his or herself in a difficult financial position, it can have an adverse effect on their credit score, and by default, on yours.
Alternatively issues can arise because the relationship has turned sour. For example, one person may choose to stop paying the mortgage without telling the other. Again, this can damage you own credit score, even though the situation was out of your control.
What You Can Do
In order to protect your own credit score, you can request to be financially disassociated from your ex.
To do this, you first need to decide how you're going to divide your matrimonial financial assets. If you can't come to an agreement, one of our Divorce Solicitors can help you. Or you might find that services such as Mediation can help you reach a decision.
When each person has received their share of the matrimonial assets, you should close down any joint accounts and ensure assets are transferred into sole names.
Afterwards, you can contact credit reference agencies and ask them to provide you with a Notice of Disassociation. Once you have this, the link between your credit and your ex's will be stopped.
If you don't file for a financial disassociation and you go on to apply for credit, the credit history of both you and your ex may be taken into consideration. This could prove to be damaging.
Speak to a Divorce Solicitor
Sorting out matrimonial finances in divorce or separation can be difficult and stressful. If you'd like any help resolving your money matters, our Divorce Solicitors can help you.