What is a credit score?
A credit score is a number between 300 and 850 that shows how ‘creditworthy’ you are. Lenders use your credit score to determine whether you’re likely to repay loans on time. The higher your credit score, the better you look to potential lenders.
Your credit score is based on your credit history including:
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Your total levels of debt
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Your loan repayment history
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Whether you have a mortgage
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The number of bank accounts you have
Divorce and credit score
Having a good credit score after a divorce is essential.
Your credit score will determine how easy it will be to rebuild your life, from getting a mortgage for your new home to being approved for a loan for a new car.
That’s why you need to bear in mind how your credit score could be affected by getting a divorce.
Why does divorce affect credit score?
Divorce doesn’t affect your credit score directly – your marital status isn’t even mentioned on your credit report.
However, many couples notice a drop in their credit scores after a divorce. So why is this?
The main reason why divorce affects your credit score is because of taking out joint credit with your ex while you were married.
Taking out joint credit is normal in a marriage. You might have both your names on a mortgage, made joint bank accounts, or taken out joint loans.
However, it can cause problems after a divorce.
There are two related problems: the handling of any joint debts, and financial association.
Joint debts
The first way that joint credit can damage your credit score is the way that joint debts are handled.
Many divorced couples will still have joint debts, usually in the form of a mortgage.
When you take out any joint credit, including a mortgage, each partner is legally responsible for the debts and repayments. So, if one of you can’t keep up with their share of the repayments, the other is legally obliged to step in.
This isn’t a problem when you’re living together as a couple. For example, if your ex-spouse lost their job, you would know that you may have to help them pay their share of the mortgage.
But when you’re separated, and your communication is reduced, this becomes more difficult.
You would largely have to trust that your ex is making the repayments. If they weren’t keeping up, for whatever reason, you would have less way of knowing. So, you would be less likely to step in to cover their share of the debt.
In this situation, your credit score would go down, even if you repaid all your share of the debts.
In most cases where a former spouse doesn’t pay their share of joint debts it’s because they’re unable to pay. After all, divorce can be expensive. However, it’s not out of the question that a vindictive ex could intentionally ignore debt repayments to damage your credit score.
Financial association
Another related problem of taking out joint credit is ‘financial association’.
When you take out joint credit with someone else, you become financially associated with each other – for better or for worse.
Being financially associated means that you show up on each other’s credit reports. This means that when you apply for credit, your ex-partner’s credit score will be considered by lenders alongside your own.
What people often don’t realise is that this financial association continues after divorce. Furthermore, it remains the case even after you’ve resolved any joint debts, like by closing joint bank accounts and repaying joint loans.
This isn’t necessarily a problem if your ex-partner has a strong credit score. But you might not be so lucky. And it’s not an ideal position to be in where your ex’s financial situation has a direct impact on your credit score, completely outside of your control.
There’s probably no worse time to be tied to someone’s credit score than after a divorce.
Divorce can be expensive. On top of legal fees, a former spouse may need to buy or rent a new home and pay maintenance. Even those who have been good with money in the past may struggle financially.
When you’re financially associated, this is bad news. If your ex-spouse is struggling to keep up with their debts, their credit score will go down – and they’ll drag yours down with them.
Alternatively, your ex could use their financial association with you to hurt your credit score. For example, they could take out joint loans without telling you, putting you into debt.
How to protect your credit score after divorce
There are few things you can do to protect your credit score after divorce.
Close or separate your joint accounts
Ideally, you should pay off any overdrafts and close the joint accounts down. If that’s not possible, ask your bank or lender if you can covert the accounts to be in your name only.
Be civil with your ex
You should try as much as possible to be civil with your ex and work together to pay off debts and close accounts.
This means your ex will be less likely to do anything to intentionally damage your credit score.
Remember that until your finances are separated, you’re both tied together. It’s up to you whether you sink or swim.
This means that you should also take care to make your joint debt repayments until you’re financially separated.
Get a notice of disassociation
When you no longer share joint finances with your ex you can ask credit reference agencies to remove them from your credit report. This is known as a notice of dissociation.
Once this has been approved, you’ll no longer be financially associated. This means that your ex’s financial situation will no longer affect your credit score.
What is a good credit score?
In the UK, a good credit score differs by credit reference agency:
- Experian: Good: 881-960, Excellent: 961-999.
- Equifax: Good: 420-465, Excellent: 466-700.
- TransUnion: Good: 604-627, Excellent: 628-710.
A good credit score shows lenders you're a low-risk borrower, potentially leading to easier credit access and better terms.
Maintaining a good score involves timely payments, low credit card balances, and minimal new credit applications.
Talk to a solicitor
If you’re unsure how to split your credit after a divorce, you should speak to a solicitor.
The Law Superstore connects you with family solicitors across England and Wales.