Divorce itself does not appear on your credit report. There is no flag that says "divorced" and lenders do not penalise you for it. But the financial fallout from divorce can do serious damage to your credit score if you are not careful, and many people do not realise what is happening until they try to get a mortgage or a loan and get turned down.
The Joint Account Problem
Any joint financial product, a joint bank account, a joint mortgage, a joint credit card, creates a financial association between you and your ex on your credit file. While that association exists, their financial behaviour affects your score. If they miss payments, take on debt, or default on something, it can drag your score down even though you did nothing wrong.
Close joint accounts as soon as practically possible. If you cannot close them immediately, at least remove yourself as a joint holder. For joint mortgages this is harder and usually has to wait until the property is sold or the mortgage is transferred, but for bank accounts and credit cards it should be done straight away.
Filing a Notice of Disassociation
Once all joint accounts are closed, contact the three main credit reference agencies, Experian, Equifax, and TransUnion, and ask for a notice of disassociation. This removes the financial link between you and your ex from your credit file. It is free and usually takes a couple of weeks. Until you do this, their finances continue to affect yours.
Rebuilding Your Credit
After divorce, many people find their credit score has dropped. Sometimes it is because of the joint account issues above. Sometimes it is because their income has halved but their outgoings have not changed. Sometimes it is because they have moved house and are not on the electoral roll at their new address. Register on the electoral roll as soon as you move. It is one of the simplest things you can do to improve your credit score.
If your score has taken a hit, rebuild it gradually. A credit builder credit card, used for small purchases and paid off in full each month, will steadily improve your rating. Make sure all your bills are paid on time. Avoid applying for lots of credit at once, as each application leaves a footprint on your file.
Check Your Report
Get a copy of your credit report from all three agencies. You can do this for free through ClearScore (Equifax), Credit Karma (TransUnion), and Experian's free service. Look for accounts you do not recognise, joint accounts you thought were closed, and any defaults or missed payments that are wrong. If anything is incorrect, dispute it directly with the agency. They have 28 days to investigate.
Always check the terms of your specific agreement, as individual contracts can vary. This article is for general guidance only and is not legal advice.
Your email won't be published. Comments are moderated before appearing.