Can divorce affect your credit score?

Your credit score is probably the last thing on your mind when you're going through a divorce. While separation won't directly affect your credit score – as credit reports don't record marital status – the financial implications could have an impact on your credit health further down the line.  

Let’s look at what you need to know about divorce and your credit score, including the steps you can take to avoid any unexpected impact on your credit health.

How does divorce affect your credit score and report? 

Divorce or separation will probably see changes to your household income and financial commitments. It might change the way you manage your bills, result in the closing of some accounts, or leave you with niggles when it comes to the implications of shared debt. You might also change your address or your name. 

Here’s what the different changes can mean for your credit score. 

Name and address changes 

Because the legal status of your relationship doesn’t appear on your credit report, there won’t be any changes to your personal details until you update them. So, you may need to contact your credit providers, update your Electoral Roll information, and possibly remove some financial associates (more on this in the next section). 

Being registered on the Electoral Roll and making sure your personal information is reflected correctly on your credit report is essential for a healthy credit score. 

Your Electoral Roll listing is often used by lenders to verify your name and address details during credit applications. If (as may be the case after divorce) your name and address on your credit report differs from what’s included in your credit applications, lenders may reject your application or ask for further proof of identity, delaying the process.  

The impact of Financial Associations 

Relationships often see couples taking on shared financial agreements such as mortgages, loans, or joint credit cards for household spending. These create a ‘financial association’ between you and your partner – but it's important to note that while shared accounts within marriage are a common form of financial association, it’s not the only way these associations are created. Financial associations come into effect with any shared financial agreement or commitment regardless of the relationship of the participants. 

Once created, financial associations are listed on your credit report, and potential lenders may look at both your report and theirs when you make a credit application, even if you’re applying just under your name. As a result, while your financial associations do not directly impact your credit score, their financial activity could influence your future credit applications. 

Shared debt

Joint credit agreements mean a joint and equal share of any outstanding debt.  

The legal dissolution of a relationship doesn’t change this until your joint accounts are separated. Until then, if one partner can’t keep up with their share of the debt, the other is legally obliged to make the payments.  

You can choose to have the joint account transferred to one partner who is completely responsible for making the required payments, or as is common in the case of large debts such as mortgages, you can sell the asset and split any remaining equity equally between you. 

Remember though, even once all joint debt is repaid and associated joint accounts closed, you remain financially linked to your partner until you remove them as a financial association.  

Closing of accounts 

A well-managed credit account will have a positive effect on your credit report and score. So, if you have to close an account with a good payment history after separation, you might see a drop in your credit score for a brief time.  

But as long as you continue with on-time and regular payments on your other open credit agreements, you should begin to see your score grow again. 

Changes in your incomings 

Depending on how your financial commitments were divided up, you may find that while your expenses may remain largely the same initially, there’s likely to be a reduction in the money coming in.  

It's important to have a plan in place for keeping up with your bills and credit agreements to avoid missed or late payments until your finances are able to be split. Late or missed payments on any accounts listed under your name (regardless of who usually paid them) will have a negative impact on your credit report and score.  

We’ve partnered with amicable – trusted legal specialists for separating couples. Don’t know where to start when it comes to splitting money and property? Expert legal guidance can help you come to a fair agreement. 

Solicitors and lawyers aren’t your only options. amicable offers a unique approach to divorce and separation that can help reduce conflict, keep costs down, and put your family first. Book a free 30-minute consultation to learn how they can support you with the legal, financial and/or parenting parts of your divorce or separation. 

Minimal credit history 

If one partner is responsible for most of the bills during the course of a relationship, the other may find on divorce or separation that their credit report looks a little bare, lacking the credit history that makes it easier to access credit.  

This is particularly common in the case of those relationships that spanned six or more years (the length of time credit information usually remains on your credit report). The good news is that there are simple things you can do to grow your credit score over time.  

Updating your information after divorce: What needs to be done? 

Financial associations 

Once you and your ex-partner have agreed on the division of assets, you should be able to close all shared accounts or shift them into individual accounts. After you close your joint account, you can expect it to take four to six weeks to update on your credit report.  

The UK credit reference agencies – Experian, Equifax, and TransUnion – then need to be told that the financial link should be removed. This process of disassociation is an important follow up step and can take up to 28 days. 

Until this is done, you may find that even years down the line your financial association’s borrowing history could impact your credit applications. You can read more about removing financial associations here.

Name and address change - Electoral Roll

A simple step towards a healthy credit score is to make sure you’re registered on the Electoral Roll and that your name and address is being correctly reported on your credit file. The Electoral Roll is one of the ways that prospective lenders verify your details during the credit application process and is an important step in preventing fraud.

If you change your name or address after separation, updating your personal information is a simple process that can be done online or by contacting your local authority. Keep in mind that once the Electoral Roll is updated, it can take up to three months for changes to show on your credit report.  

4 Tips to keep your credit report in good shape following a divorce

The key to reducing any negative impact on your credit score is to be proactive about managing your credit and credit information.   

1. Rearrange your bill-paying routine accordingly. Separation is often a stressful time and shifting financial responsibilities can make it easy to unintentionally miss payment dates. Make sure you keep up with any bills, and know what’s due when, even if that particular bill was your partner's responsibility previously. The best way to maintain and build a positive credit history is through regular and on-time credit repayments. Missed or late payments remain on your report for six years and can lower your credit score. 

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2. Adjust your expenses as needed. There may be an adjustment period after separation where a two-salary household moves over to a single stream of income. You may find it helpful to draw up a budget to help you stick to your financial goals as these changes happen, so that you can keep up with your financial agreements and maintain your monthly payments. 

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3. Monitor your credit report.  It's a good idea to keep a regular eye on your credit report, especially during big life changes like a separation or divorce. You’ll be able to see how joint accounts and debts are being reported, and you might want to check if there are any financial associations listed who are no longer relevant. It’s important to make sure that your personal details, such as a new address, name, and Electoral Roll information, is correct. 

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4. Monitor your credit utilisation rate (CUR). If you’re resolving joint accounts and begin taking on new personal credit cards and loans, your CUR could change. This rate measures how much of your available credit you’re using. It’s beneficial to keep this around 30%, as this shows lenders that you’re using credit responsibly but aren’t reliant on it. You can see your current balance, headroom, and credit limit on your Checkmyfile report.

To recap: 

While your divorce won’t directly impact your credit score, you may find that there are indirect impacts further down the line.  

But knowledge is key to mitigating the impact these changes in your finances can have on your credit score. Getting ahead through planning, keeping your information up to date, and staying on top of your credit payments will help you keep your credit health in check.