Why and how to issue a notice of disassociation

By Benjamin Salisbury

If you have shared finances with someone in the past, you have a financial association with them. If that person runs up debts, it could cause a negative impact on your credit. To make sure this doesn't happen, you can apply for a notice of disassociation, which breaks the link between former financial partners.

"A notice of disassociation is a request to break financial ties with someone who is recorded as part of your credit history," Melanie Taylor, spokeswoman for the Debt Advisory Centre, said in an emailed response to questions. "This could be a partner or ex-partner, family member or friend."

When do you become financially associated?
You financially connect with someone when you jointly apply for financial products such as a mortgage, bank account or credit card with them. Additionally, if you have county court judgements in joint names, it creates a link. However, being a business partner with someone does not make you financially associated, and neither does living with someone.notice-of-disassociation

"The myths around associations include people wrongly believing they can't get credit because their parent or sibling has a poor credit rating," said Taylor. "Even if they have shared an address, they won't have associations unless they have had a shared credit account such as a loan or credit card."

To see who you are financially associated with, you can check your credit report or use a free service such as Noddle or ClearScore and look under the "financial associations" section to see if any names appear there. You can see a sample of what this looks like on an Experian credit report here.

One of the most common reasons people are turned down for credit is because they have financial associations they don't know about, Taylor said.

How can an association affect your credit score?
A lender wants to be sure they will get their money back before lending to you. One factor that influences this is if you have any financial associates and whether any debts from their actions will leave you with a liability.

"When a lender assesses an application for credit they will look at the financial commitments that an individual has," Laura Barrett, senior regulatory and compliance officer with Equifax Consumer Affairs, said in an emailed response to questions. "Where someone has a financial association, then the lender may look at the other person's credit report, too, because this could affect the applicant's ability to manage their financial commitments."

Additionally, having too many associates may discourage lenders from lending to you because they think you have a higher risk of not being able to cover all liabilities.

How to issue a notice of disassociation
If any of your financial associations are wrong or outdated, you can issue a notice of disassociation.

First, you'll have to close any joint accounts, or transfer them to a single name. The details relating to your ex-partner will remain on your credit report until you end all joint financial commitments.

At this stage, you can issue a notice of correction, which allows you to add a note to your credit report before a notice of disassociation is filed.

You then need to contact the credit reference agencies and complete a form giving the name, date of birth and current address of the person you want removed, plus any previous addresses you have shared and their relationship to you.

You cannot still be living at the same address with the individual if you want to file a notice of disassociation; you need to have been living apart for at least six months. If you have a joint loan, you will need to pay it off before applying. You need to apply to each of the credit agencies individually, as they don't always share information.

Once the notice is issued, the financial links are removed and the other person's credit rating will not affect your credit worthiness anymore. "It is the monetary version of a divorce," said Taylor. "It removes any financial link with your ex-partner on your credit file."

"Asking for a financial associate to be removed from an individual's credit file does not leave any mark on the credit file," added Barrett.

See related: Can social media help you get credit?, 7 small mistakes that can break your score

Published: 23 November 2015