Rebuild Credit after a Divorce or Separation
A divorce or separation from marriage or a civil partnership can be challenging financially, particularly if your credit rating has been damaged or if your ex-spouse or partner dealt with the finances and you have little or no credit history in your own name. The costs of divorce or separation as well as a new life with reduced income, particularly if you have dependents, can mean managing your finances on your own is a challenge. But just when you need credit the most you may find that your credit rating prevents you getting a credit card or loan!
Vanquis Bank is a UK credit card company with operations in Chatham, London and Bradford. A subsidiary of the Provident Financial Group, which was established nearly over 130 years ago, Vanquis Bank was established in 2002 and has since helped over 3 million UK customers+.
Vanquis credit cards can help people seeking to build or rebuild their credit ratings after a divorce, separation or relationship breakdown.
↗To build your credit rating and be considered for credit limit increases, use your card sensibly, stay within your credit limit and pay your monthly minimum payment on time. Not doing so could harm your credit rating and make obtaining credit more difficult.
Divorce Costs and Credit Ratings
According to the Office of National Statistics there were 117,558 divorces in England and Wales in 2011 which equates to around 11 people divorcing for every thousand married people. The divorce rate rose 5.7% between 2009 and 2010.
A divorce or separation can put financial strain on each party. The average divorce can cost as much as £28,000 when including all the costs of setting up a new home, buying new items (like a car), and lost personal savings according to The Cost of Divorce study conducted in 2006 by Aviva.
Joint Liability for Debts and Credit Ratings
The Aviva research found that 62 per cent of couples had shared finances that had to be sorted out on divorce and that almost half of couples had to dip into personal savings to meet costs. Of particular concern for divorcing couples is liability for credit card or catalogue debts and loans taken out under joint names where a spouse may be held liable for the debts incurred by the other party. This can be for debts incurred both before and after the divorce, separation or relationship breakdown where the debt is in joint names.
A credit reference agency can see who is registered to vote at an address and financial information about people who share a financial connection. If a person is financially linked to someone else, the name of this person will appear on their credit report under the Association section and the credit history of an associated person may affect whether a credit provider will provide credit. So after a divorce, separation or relationship breakdown it can be important to update public records, for example by applying for a Notice of Correction to show the termination of the association and registering on the electoral roll (if eligible) at a new address.
Because of this, divorcing couples should consider cancelling any jointly held credit cards and making provision for the payment of any debts incurred in joint names including paying any outstanding bills for the home. Paying attention to all of these issues can help reduce the risk of the break up affecting a person’s credit rating due to the actions of their former partner.
Access to Credit During or After a Divorce
As a result of a divorce, a person may have to adapt to living alone with higher costs as expenses that may previously have been shared such as rent, heating, groceries or a television licence are now paid from one income. Depending on individual circumstances, many may need access to credit, loans or overdrafts to fund rental deposits, new furniture, cars and increases in general living costs, even if only for a few months after the relationship breakdown.
Vanquis Bank will consider applications from divorced and separated people who require credit during or after a break up.
Rebuilding a Credit Rating After a Divorce
When a credit rating has been damaged by divorce, separation or a relationship breakdown it can be difficult to access credit. However, responsible use of a Vanquis Visa Card could build or rebuild a credit rating and help gain access to increased credit opportunities in the future.↗