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How to rebuild your finances following financial abuse
Posted: 21st Apr 2021

The effects of financial abuse on an individual can be devastating, leaving them feeling isolated, lonely and trapped, as well as impacting on their ability to borrow money in the future. It can be a difficult situation to overcome, however, with the right support and action, it’s possible to regain independence and rebuild your finances.

What is financial abuse?

Financial abuse is a situation that occurs when someone, such as a partner, family member, or caregiver, takes control of an individual’s finances and how they spend their money. This can vary from having to explain every purchase made, to stopping essential purchases, and in some extreme cases, taking out credit cards or loans using their partner’s details. Additionally, financial abuse can also involve limiting someone’s financial prospects, which in turn could stop them from working or gaining an education.

According to recent research, nearly two in five adults in the UK have experienced financial abuse in a current or former relationship. Furthermore, 3 percent of adults saw the abuse start during the COVID-19 pandemic. This is a worrying figure, especially when coupled with the fact that only 16 percent of people actually recognise their experiences as abuse.

Getting help with financial abuse

Whether you’ve recently left a financially abusive relationship, or are preparing to leave one, the most important thing to do first is to establish all of the credit agreements that you are named on. No matter if you make these payments directly yourself, if you are named on the contract you are still financially responsible. These credit agreements can be accessed online or by requesting a physical copy.

Furthermore, taking the time to check your credit score will help to highlight any individuals you are linked with. This could include ex-partners with whom you applied for finance in the form of a credit card or mortgage for example. As a result, this person’s own personal credit report may be taken into account for any of your future applications. Luckily, you are able to distance yourself from any ‘financial associate’ through a notice of disassociation.

So, what should you do now that you have highlighted all credit agreements you are named on? In short, the best thing to do is to keep things as ‘normal’ as possible by continuing to honour any existing payment agreements. Failing to do this could have a negative impact on your credit score, which would further damage your situation in the future. Additionally, if you’ve recently left a shared home, you’ll also want to make sure that you notify lenders of your change of address, as well as register your new address on the electoral roll. This is a quick and simple action that can improve your credit score. Now is also a good time to get any relevant child support affairs in order.

How to improve your credit score

Taking the time to improve your credit score is one of the most important things you can do if you have suffered any form of financial abuse. Your credit score is a number that depicts your creditworthiness, in other words, how likely you are to get credit. Here are some easy ways you can boost your credit rating.

  • Stay on top of monthly payments, such as your phone bill, and stay within any agreed credit limits
  • Keep a record of any current credit accounts and be wary not to apply for too many at once
  • If you do have any outstanding defaults or County Court Judgements (CCJs) ensure these are repaid as soon as possible
  • Be sure to only apply for credit that you know you can afford
  • If you haven’t already, register to vote using your current address

Will my financial past affect future mortgage applications?

When applying for any form of credit, be it a loan, credit card, or mortgage, you must be able to show the lender that you can afford the repayments while having a reliable credit history. For those who have suffered financial abuse, this can be tough, especially if they have struggled with debt.

If you are concerned about being accepted for a mortgage, working with a lender who operates a manual underwriting system could be beneficial. This process involves the bank or building society looking into individual circumstances to gain a better understanding of the situation. By using conversations rather than computers to make decisions, personal circumstances can be taken into account.

While it can be challenging to overcome past financial abuse, working with a lender who understands your situation will help you navigate the process.

If you are in a financially abusive relationship, the Money Advice Service has a list of organisations that offer help and support.

Your home may be repossessed if you do not keep up repayments on your mortgage.