Post-Relationship Credit

13 Feb 12 / Posted by: Fran Sidoti

MSN Money raises an interesting thought this week. Could the end of a serious relationship damage more than your state of mind, could it also have a disastrous effect on your credit? Much has been written about the effect, mostly on women, that divorce or the end of a de-facto relationship can have on finances. This is the first time I?ve read an in-depth account of what effect it could have on your credit- an especially important aspect of your finances as you try and establish yourself independently. This goes as much for de facto relationships as marriages, as the laws regarding de facto regard your finances as one after a period. Here are some of the tips from the article.

New Budgets

You?re in shock, the last thing you want to think about are budgets. Yet it?s an important time to take stock of where you are financially. After all, you?ve just gone from a two-income household to one income source. This is going to cause a massive reevaluation of your finances. It could also be that you weren?t responsible for budgets while in the relationship, so it?s necessary to get on top of things as quickly as possible. Look at your mortgage repayments, maintenance, insurance. You?ll also have new costs, such as rent. Then consider your credit card repayments and subscriptions you might have. If things are tight, you might need to get tough and cancel any discretionary subscriptions until you?re back on your feet.

Know Your Debts

The worst thing that could happen is that you start defaulting on debts, whether in the belief your ex-partner is paying it off, because you?re struggling financially or, even, because you didn?t know if existed. Trying to establish yourself with a smeared credit report, sometimes unknowingly, can be a hard road so make sure you know every debt your name is associated with. The best way to find out is to get your credit report, which will sum up all of your debts.

Name Off The Card

People do crazy things in big emotional times. It?s best to take each other off your cards as authorised users; just contact the credit card issuer and ask that their name be removed. It?s as important to have your name removed from your spouse?s card as you wouldn?t want their future actions to be reflected in your credit report.

Remove Joint Accounts

Contact your lender and ask to be removed from joint accounts. It?s not necessarily easy, so there are a couple of ways to get around the difficulty of getting a lender to remove your name. Transfer the balance of joint credit cards onto your separate ones. Try and refinance the mortgage so it is in one spouse?s name. Write down the arrangements at the divorce settlement- sometimes the person who keeps the house maintains the mortgage, and the person who keeps the car pays it off. Whatever the arrangements, discuss it with your lawyer and get it in writing. If you can?t separate the accounts, make sure you see the statement every month, even if you?re not responsible for the payments. A bad credit report is far easier to prevent than to repair, and knowledge and organisation will ensure your stay in the black.

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Source: http://www.savingsguide.com.au/post-relationship-credit/

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