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How is your credit rating affected by a divorce?

How is your credit rating affected by a divorce?

Help from a Divorce Lawyers Guildford and how your credit rating will be affected by a divorce. Your credit report will not be directly affected just through a divorce, after all you are not judged on your credit score by your marital status, so the actual physical act of divorcing or separating will have no direct impact on it.

How can divorce affect your credit rating? Well losing two incomes can lead to missed, or reduced, payments on your mortgage, credit cards, loans etc. Even making your usual regular bill/utility payments may become difficult. Divorce can also hurt your credit score if you do not make payments on accounts held jointly between both you and your ex partner. In some divorce cases a judge will decree that one party is responsible for any joint debts, however if that spouse fails to make a payment, makes it late, or pays a reduced amount then the creditor will add that to both of your credit reports – the creditor is not interested in who the judge says is liable, to them you are both equally responsible. Sometimes this will allow one spouse to deliberately affect the others credit rating, out of spite, sheer malice or revenge. In these circumstances make a note of the due dates and amounts and keep an eye out for payments. It may be that you need to make a minimum payment to keep your credit score intact and you can ask the judge to refund you with any payments which you have had to make yourself. Credit agencies don’t tend to add a late payment against your account until approx 28 days after it’s due, so by keeping a close eye on these joint accounts and by making a minimal payment where necessary, you can help keep your score unaffected.  As Divorce Lawyers Guildford we are here to help you through the process.

If you have joint liabilities and divorce is imminent, then act now and sever your financial ties as soon as you possibly can. You can go through your bank statements etc to check outgoings and also check your credit report. Use recent bills to check exactly what you have held jointly. You will need to contact these creditors and cancel the agreements by phone, but also in writing so you have covered yourself adequately. Also ask the creditors to not allow them to be re-opened in joint names. Also remove your spouse’s authorised user status on any credit cards etc that are held in your name only to avoid them being able to run up further debts in your name. You should both take responsibility for the debts in your own names and may need to look at refinancing or transferring credit card debt to a loan or similar. If you cannot reach an agreement on the details of who owes what, then as expert Divorce Lawyers Guildford we can help you work together to reach a suitable outcome, otherwise it will fall to the court to make a judgement and final decision on the responsibility for the debt.

You will want to protect your credit score after the divorce is finalised and there are a number of ways to do this. Firstly keep in mind that it is your level of debt and payment history that are the two main factors which affect your credit score. So maintaining a good payment history with the required regular payments and also minimising your debt during and after the divorce is important.

You may need to make some major adjustments and life changes too if you are going down to one income. This may include things like buying a smaller car or refinancing to a cheaper one if you are struggling with the payments. Also you may need to look at moving to a smaller property or a cheaper area, reducing your grocery bills, cheaper mobile phone contract, broadband etc. The best thing to do is to make an accurate budget based on your new financial situation and make adjustments accordingly. You should make your creditors a priority and cut down on the things that are not necessities. Also, although it is difficult, try not to include any child support payments or spousal maintenance you may receive, as these cannot be relied on as regular payments and may change if your spouse’s circumstances change, i.e. they lose their job, or take a lower paid one. It also means that if they do stop you aren’t left unprepared and unable to pay your bills.

So whilst the divorce itself won’t directly affect your credit score, you should be aware of all the potential areas where it may have a negative impact on your financial future and a good idea of how to avoid or minimise that happening.. Here a Gregorian Emerson Family Law Solicitors we are expert Divorce Lawyers Guildford and we can talk you through all aspects of your divorce process.

Call us today on 01483 826470

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