Will Divorce Impact My Credit Score?

Many people going through divorce will be concerned about how it will affect their financial future, including their credit score. While getting divorced itself does not directly impact your credit score, the financial changes that come with separation can. It is likely that you and your ex will have some shared financial commitments, such as joint bank accounts, loans, or your mortgage. All of these could continue to affect your credit rating even after your divorce.

It is important to understand how divorce can impact your credit score so you can take steps to protect yourself financially. In this article, we look at the things you need to consider about your credit score following divorce and how to move forward financially after separating.

Your credit score is a numerical representation of your creditworthiness. It will be based on your credit history and helps lenders work out how likely you are to repay borrowed money. They are calculated using factors such as your history of making payments on time, the amount of debt you owe, and the length of your credit history

Credit reference agencies such as Experian maintain your credit report, which lenders use to assess your financial reliability. A good credit score will help make it easier to get a loan, mortgage, and credit cards with favourable interest rates. A poor credit score can limit your financial options.

Credit reports do not record marital status so the divorce itself will not directly impact your credit score. However, the financial consequences of divorce can unfortunately affect your credit. If your ex does not keep up with your joint financial obligations, such as your mortgage or credit card payments, this could be recorded on both of your credit reports. It is important to manage your finances during and after divorce as this will help minimise any negative impact on your credit score.

Sometimes changes in income and the division of assets can create financial strain during divorce and this may lead to missed payments or increased borrowing. Additionally, when a former spouse had control over household finances, the other person may need to build their own independent credit history. A reduced credit rating after divorce can happen but there are ways to protect and rebuild your financial standing.

To protect your credit score after divorce, it is essential to separate your finances as soon as possible. Any accounts held in both names should be closed and transferred to a single name where possible. This includes joint bank accounts, credit cards, and loans. If you and your ex have shared financial obligations, make sure there is a clear agreement on who is responsible for payments.

You should also contact credit reference agencies to request a ‘financial disassociation’ from your ex to ensure their financial actions no longer affect your credit score. Regularly check your credit report to ensure all information is accurate and that no joint accounts remain open without your knowledge. By taking these steps early, you can reduce the risk of financial issues affecting your credit rating.

If your credit score has been impacted by divorce, there are ways to rebuild it over time. Consistently paying bills, credit card balances, and loans on time is one of the most important factors in improving your credit score. If you have little or no credit history in your own name, consider opening a credit card or taking out a small loan and repaying it responsibly. Rebuilding credit takes time, but by managing your finances carefully, you can work towards a healthier financial future.

A financial clean break is a legal agreement that ensures both parties’ financial ties are completely severed following their divorce. A clean break order finalises the division of finances and this prevents either spouse from making further claims for assets, property, or income, including pensions. This protects your financial future, ensuring that any debts or financial issues related to your ex-spouse do not affect your credit score in the long term.

The financial changes that come with separation and divorce can have an impact on your credit rating. It is important to take steps to separate finances, remove financial ties with your ex-spouse, and manage your credit responsibly. This will protect and improve your credit rating over time.

Understanding how divorce affects your finances will help you regain financial stability. Speaking with a specialist family law solicitor can help provide clarity and support about your financial future.

Ready to take the next step? As leading divorce solicitors in Milton Keynes, our team of family law specialists can advise and guide you from the moment we start working with you. As well as our head office in Milton Keynes, we also have offices in Bicester, Watford, and London where we can arrange appointments to see you in person. Talk to us in confidence and find out where you stand. Get in touch – we’re here to help.

This article is intended for the use of our clients and other interested parties. The information contained in it reflects the author’s view and is believed to be correct at the date of publication. However, it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional legal advice.