Separating or Getting Divorced? 6 Things You Need To Know To Prevent Spiralling Into Bad Credit- Tip 1
What can you do during this difficult time to protect your credit file and avoid getting a bad credit history? Over the next month Fair Go Finance will expose many pitfalls and provide 6 helpful tips to help those entering this difficult time. Our first tip addresses the very distressing event when one person is forced or chooses to move out.
Tip ONE: One person moves out - So who pays the rent/mortgage?
Often one partner will temporarily move out of the communal home. In this situation you must discuss and both be clear on how the mortgage or rent is going to be paid during this time.
First, whether it is a home you mortgaged or a rental property, you must confirm who is legally responsible for the payments. If the mortgage or rental agreement is only in one person’s name, then that person is solely “legally” responsible for ensuring the mortgage/rent payment is made on time. This is because you have solely signed the mortgage papers or rental agreement - the other partner is not legally required to contribute anything and therefore will not have their credit file affected if payments are missed. If the mortgage or rental agreement is in joint names, then both of you are accountable for the timely payment and must ensure this is done.
IF YOU DONT: If you both intentionally avoid payment, the Bank or Property Agent will notify a credit reporting agency (such as Equifax) that you have missed the payment. This could result into your credit history turning into bad credit history.
This credit reporting agency will then update your credit file with a default listing which is then available to be seen by anyone that you approach for credit/loan or service in the future. This type of default will be permanently recorded for 5 years on your credit report and will cause road blocks each time you try to obtain any type of loan or credit facility.
BE RESPONSIBLE: If you establish it is your sole legal responsibility to make payment, then immediately work on how you can ensure the payment is on time. Contact the bank or property agent to make them aware of the situation as you may be able to work out a different payment arrangement (for example your housing loan may be in surplus so you may be able to temporarily reduce the size of the mortgage payment.) If the other partner won’t contribute and is not legally responsible to make the payment then you will need to address this separately via lawyers or the division of other assets. The most important issue at hand is that the rent or mortgage payment is made. Make this your key focus.
Our next tip will look at credit cards and the very important pitfalls you need to be aware of….
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