Credit Status impacted by divorce: How Divorce impacts your credit status in South Africa in 2023
What this blog is about:
Divorce could Affect your Credit Score
Your credit score has a lot to do with how you live your life and how much money you make. If you want to buy a home, get a car loan, or open a checking account, having good credit helps. When it comes time for those companies to review your application for credit, they’ll look at three factors:
- payment history (how often and on time payments have been made)
- amounts owed (how much debt someone has)
- length of history (how long someone has used credit)
Changing the name on an account will destroy your credit
If you are changing the name on an account, it will affect your credit score in the same way that closing the account would. Changing the name on a credit card account will trigger a hard inquiry and can result in lower credit score. A lower score can impact your ability to get future loans and lines of credit.
Closing a jointly held account can impact both of you negatively
Closing the joint account can negatively impact you alone, but it can also hurt your spouse.
If you close the joint account and pay off the balance, which will lower your available credit and increase your debt-to-income ratio—which is calculated by dividing your total debt by your monthly income. This means that if both parties have equal balances on their individual credit cards, one spouse could end up with a higher debt-to-income ratio after closing the joint credit card than before. This may affect their ability to secure new lines of credit for things like buying cars or homes in the future.
Some couples opt to leave both names on accounts even after getting divorced because they don’t want to lose access to their credit score (or potentially raise their partner’s score). But leaving an account open still has its drawbacks: If either party withdraws money from the account or incurs new charges without informing the other party, it could result in fraud alerts being sent out by other financial institutions
Your ex-spouse’s credit history can still have an impact on your credit score.
Sad but True Your ex-spouse’s credit history can still have an impact on your credit score. Your credit score is based on your personal credit history and not the one of your spouse. So, if you are divorced and continue to share a joint account with your former partner, then the new inquiries for this account will appear on both of your reports.
The only way that information about an ex-spouse’s debts would appear in a report shared by two people would be from a payment collection account or judgment against them that was included among other derogatory items (such as late payments or charge-offs) in another person’s file. If this were the case and their name does not appear anywhere else on either report, it could still raise questions with lenders who may wonder why they have not been paid off yet.
You might not be able to get the new car you want after divorce
In order to get the best possible loan terms, you’ll need to show that you can make payments on time. Your credit history and payment history are used in this calculation. If your spouse is still on the loan, then it’s likely that he or she will be responsible for making payments after your divorce—but if not, then it’s up to you alone.
You also need to show enough money saved up for a down payment on the car of your dreams. The bank wants proof that they won’t lose their investment if they lend money out at this point in time. (and how can they know whether or not they will?).
We all have bad days when we might miss our bills by accident or forget about an important payment date. (Or two), Banks look at these instances as signs of financial irresponsibility which is something that may cause them to deny a loan application altogether!
Renting an apartment could be more difficult after divorce
Renting an apartment could be more difficult after divorce.
Many couples who are married use credit cards and other loans together, which can hurt both parties’ credit scores when they break up. If you’re the spouse with the lower credit score, get a copy of your report and take steps to repair it. You may also want to consider renting only if you have a high enough income to afford the rent on your own or if your partner will cosign for you.
Both parties will suffer if one spouse ruins their score during divorce proceedings.
Both parties will suffer if one spouse ruins their score during divorce proceedings. Credit scores are a measure of a person’s financial responsibility. It can impact everything from your ability to get credit cards to getting approved for buying a home. A damaged credit score is not only inconvenient, but it can also lead to poor financial outcomes for both parties.
Though it may be tempting to use your ex-spouse’s poor credit as an opportunity for revenge. You should resist the urge and work together with them… Repair any damage done by creating new accounts or making late payments on existing accounts.
It is better to repair the damage done to your credit rather than starting over.
It is better to repair the damage done to your credit rather than starting over. While it may be tempting to just get a new card or mortgage, this can make it more difficult for you to eventually get approved for what you need.
Even if your ex-spouse ruined your credit, there are still steps that can be taken to help improve things and bounce back from the bad situation.
Divorce can negatively impact your finances and credit score, but there are ways to mitigate and even reverse the damage.
Divorce can be a long and expensive process, which means it can wreak havoc on your finances… If you don’t manage them well. A divorce might even send your credit score into a tailspin as well. But there are steps you can take to prevent this from happening or improve your situation.
For starters, make sure that you pay all of your bills in a timely manner after the divorce is finalized. That will ensure that those accounts remain active. If any late payments appear on your credit report (and we know how hard it is not to miss one), try disputing them with the credit bureaus using their online dispute forms or by calling in directly via phone (the number is usually listed on each bureau’s website). Remember: lenders cannot legally report anything more than seven years back onto someone’s file. That means even though an account may show up as being delinquent for 18 months after its last payment. There won’t be any consequences for having made those payments late and therefore no need for dispute!
Final thoughts on Divorce affecting your credit status
When faced with financial challenges such as this one, many people turn their backs on the idea of maintaining good personal finance habits because they feel like they don’t have time or energy left over after everything else they have going on right now…but think again!
These days everyone needs something whether that means exercising regularly at home while watching TV show. at night instead of going out clubbing every weekend like old times when life wasn’t quite as busy yet still wanted us here right now so much more than ever before… or maybe going out every day between 5pm until 7pm just because we feel like doing something different without worrying about getting bored too quickly (or worse still – making other people feel bad). Whatever works best for each individual person doesn’t really matter too much though since today’s world has become full up everywhere within reachable distance from anywhere too close together
