Breakups suck. Even when they are for the best, they suck. As you feel your heart breaking, wonder how you’re supposed to sleep alone and start to feel nauseous at the thought of having to download a dating app, your finances are probably not front of mind. But they should be.
Why? Because long after you’ve sorted through the emotional fallout of extricating yourself from someone you’ve trusted, loved, relied on and shared your most intimate thoughts with, you may well find that you’re still connected financially. Or financially associated, to use the correct terminology.
This is increasingly the case because, while people today get married later on in life, cohabitation is on the rise. And because housing costs – both renting and buying – are so high (and still going up), the number of people sharing these outgoings before marriage is increasing.
This was the case for 27-year-old accountant Sarah* (who asked not to be named). She and her ex-partner shared a mortgage and a joint account at the time of breaking up.
"I had taken a pay cut and left my job to do a training course and was not expecting to be broken up with while on the lower salary," she explains. "I had partly made the decision with the understanding my partner's much higher salary would compensate for mine for that year. I have savings to rely on but that doesn’t help when calculating your potential mortgage outgoings [as a single person]."
Sarah is now renting privately again because she couldn’t take on the mortgage she shared with her ex-partner alone and says she is "in a worse financial position".
Fortunately, she says: "We had a joint current account with Monzo so that wasn’t too complex to untangle."
But it isn't always so straightforward. Thirty-three-year-old Phoebe* (who also asked not to be named) unexpectedly broke up with her long-term partner a few years ago after he cheated on her. They shared a mortgage as well as a joint bank account, loan and credit card.
"My ex refused to take himself off our joint account and stopped repaying the loan after we broke up," Phoebe explains. "This was really stressful at what was already an emotional time but it was all compounded by the financial stress of it all. I couldn’t apply for a new mortgage because our credit records were still linked because of the joint account and the mortgage."
Sarah and Phoebe’s stories are the stuff of nightmares. But there is something you can do if you ever find yourself in this situation. It’s called financial disassociation and it’s the one thing you need to know about your shared finances when a relationship breaks down.
If your credit report is still linked to an ex-partner because you previously had shared credit, this link stays on your credit report until one of you applies to have it broken.
James Jones, Experian
"You are credit checked on your name and not just where you live. But if you’ve previously taken out joint credit with your partner, such as a loan, mortgage or bank account, then both your reports will be linked in the eyes of lenders. This means that, even if you’ve since parted ways, the other person's credit history can impact your credit applications."
In order to officially cut ties you have to submit something known as a financial disassociation application via each of the three main credit reference agency websites (Experian, Equifax and TransUnion).
Crucially, Jones stresses that while "being linked to an ex won’t affect the guide credit score you can get hold of, such as the Experian Credit Score, as for data protection reasons this can only reflect financial information in your own name," issues will arise "if your report is linked to an ex-partner" because "any lenders carrying out a credit check can see and factor in the other person's credit history too, which could reduce any credit score they calculate for you, if your ex is behind on their regular payments for instance."
Phoebe believes that this happened to her. "After my ex moved out of the home we co-owned I was still getting letters for him. He said I could open the post and forward it on if it was important and I found debt collection notices as well as missed payment notifications for loans and credit cards he’d taken out since we broke up."
Ultimately, Phoebe believes that this affected her ability to remortgage and buy out her ex.
Keeping an eye on your credit score is the best thing you can do in this sort of situation.
"Your credit score helps lenders decide whether to accept an application and sometimes what interest rate to charge you so a good score can give you options and save you money," explains Jones. "If your credit report is still linked to an ex-partner because you previously had shared credit, this link stays on your credit report until one of you applies to have it broken. As a result, if they’re now in a financial mess this could stop you accessing credit, certainly at the best rates."
If you are not sure whether you’re still linked to an ex-partner you can check reasonably easily by obtaining and carefully checking your credit report. There is usually a section on your credit report listing any financial associates. And if you are still financially associated, you can get back in touch with the agency and ask for a financial disassociation.
"They may ask you to complete a short declaration but assuming there are no remaining financial ties, such as an outstanding joint loan, they should disconnect your credit reports," Jones concludes.
You can’t control how long it will take to get over a breakup and move on with your life but you can take back control of your financial future. You can find out more about applying for financial disassociation via Experian here. Via TransUnion here. And via Equifax here.
*Name changed to protect identity