Separating or getting divorced? 6 things you need to know to prevent spiralling Into bad credit: Tip 2

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. The second tip in our series tackles the very common misunderstanding regarding credit cards.

Tip TWO to avoid spirallling into bad credit:  Credit Cards. Are you the primary cardholder?

You need to confirm with the bank/card issuer of your joint credit card who is deemed the “primary” cardholder. Who ever is the primary cardholder is entirely responsible for the making the repayments in the eyes of the bank. The other cardholder is called the additional cardholder and has no legal responsibility to make any payments. If you both used the card and have purchased joint items, then you equally need to agree to maintain the required monthly payments as this is the fair and right thing to do. Sadly, in separation, being rational is often superseded by bitterness and resentment. Take the high road and discuss how you will jointly make the outstanding payments. If negotiations are not working then as a bare minimum you must check if you are the primary cardholder. If you are, you will need to make the full minimum payments and try and negotiate with your ex partner through mediation or legal advice, this is crucial to avoid getting a bad credit history! IF YOU DON’T: If you are the primary cardholder and you don’t make the required minimum monthly payment it will only be your credit file that will be affected by a default being listed. Again, this will in turn cause issues if you try to obtain a loan or form of credit over the next 5 years. Our next installment will cover bills, store cards and personal loans. Whilst a relationship seems to end so abruptly, there are so many joint financial obligations still requiring your joint focus. You both need to acknowledge that joint work must be done to avoid future financial frustrations.

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It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.

Check your options before you borrow:
For more information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor.

Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan.
If you are on government benefits, ask if you can receive an advance from Centrelink.

The Australian Government’s MoneySmart Website shows you how small amount loans work and suggests other options that may help you.

* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.