Multi-million pound break-ups are all over the newspapers – but even if you aren’t worth a fortune, you need to ensure that your finances are separated properly, or you could suffer for years.
In the distress and turmoil of parting from someone you once loved, it’s easy to overlook your joint accounts – anything from mortgages, credit cards, mobile phones or loans. In fact, your finances should be up there on your To Do list, along with negotiating who gets custody of the CD collection or the car.
These joint accounts feature on your individual credit report, the personal history of the credit you have taken out, your repayment history and other information, such as whether you have been made bankrupt in the past. Lenders look at it when they decide whether to offer you credit and what interest to charge, which makes it exceptionally important at a time when you are likely to need to borrow to fund a new start.
Your credit report also contains a section headed Financial associates. This lists all the people with whom you hold a joint account and lenders may check their credit reports too, because their financial status could affect your ability to make repayments.
So if your ex has a troubled credit record – or has problems after you have separated – and remains on your report, you could find yourself denied the credit you need to rebuild your life, or facing higher interest payments than you might otherwise have attracted.
These simple steps will help you to divorce your credit histories:
1. Check your credit report to see whether your ex is listed as a financial
associate – you won’t see details of his or her credit report, only
the accounts you share and their status. The easy way to see your report is
to take a free, 30-day trial of CreditExpert – visit www.CreditExpert.co.uk
for more information.
2. Arrange to separate your finances.
3. If the financial disentanglement goes smoothly, contact all the relevant
lenders and ask them to change their records, setting up new accounts as necessary.
4. If it gets complicated, contact the lenders involved and explain the situation
– they’ll help you to sort out the paperwork.
5. Once all the details have been resolved, contact CreditExpert and let them
know that your financial association no longer exists. From one call, all of
the credit reference agencies will be informed, so they can amend their records
too. If the only financial link you still share is a mortgage, we may still
be able to create a disassociation to separate your credit reports. Child maintenance
payments do not count as a financial link.
“Divorce and break ups are a harrowing process but the situation can be made worse if you find your credit rating being affected by your ex-partner’s financial status,” says Jim Hodgkins, Managing Director of CreditExpert. “One of the first things to do when you split up is separate yourself financially from your former partner.
“It’s vital to keep track of your credit report and make sure your credit history is in order. Your credit history is part of your financial CV – if it doesn’t reflect your current status, lenders may be less inclined to offer you credit.”
Edward Smyth, family law partner at Edward St J Smyth & Co, adds, "Divorce is not only an emotional time but also one where you're vulnerable from a financial and legal standpoint. Indeed, financial problems are often one of the biggest hurdles I have to help people overcome as they struggle to cope with reduced household income following a separation. Similar problems occur when a co-habiting relationship breaks down.
“My advice to people would be to seek guidance from experts to protect themselves during this difficult time and ensure that any financial links are severed and removed from their credit report."
To visit CreditExpert and see
your Experian credit report for free, click now.
