Financial abuse occurs in 98% of abusive relationships. This can range from limiting access to credit, to withholding assets so a victim can’t escape, to ruining a victim’s credit score. Seven out of eight women who leave an abusive relationship return, and many do so for financial reasons. Everyone with bad or limited credit faces the challenge of rebuilding their payment histories, but victims of domestic violence must also consider their safety and their financial independence.
Opportunities for abuse of credit in a relationship
- A batterer often runs up credit card debt or fails to make his payments on time. The same personality traits that lead him to abuse can express themselves in financial mismanagement.
- Abusers often hide or misuse the victim’s funds without her knowledge.
- If the victim does not earn an income, the batterer can completely restrict her access to credit by refusing to co-sign a loan.
- In a marriage, the abuser can put the victim’s name on loans without her knowledge.
- Debt or missed payments on a joint account reflect on all signers, not just the person who incurred the debt. Abusers sometimes sign their children up for credit cards and co-sign the loans, running up debt and ruining the children’s credit scores before they are financially independent.
Financial dangers when leaving an abusive relationship
- An abuser can use the victim’s credit card statements to track her down, especially if they share a joint account.
- If the abuser knows the victim’s social security number, he can see recent inquiries into her credit history, potentially revealing her location.
- Even if the victim divorces the abuser and a judge orders him to pay off all debts, he may use the outstanding debt as a way to tie her to him.
- An abuser can drain the funds in a joint account, leaving the victim financially limited.
- Even though a judge may order the abuser solely responsible for any debts, credit card companies may disregard the mandate and come after the victim.
Access to credit after the CARD Act
The Credit CARD Act of 2009, which reformed how lenders issue and set the terms of credit cards, has a significant impact on stay-at-home spouses who don’t earn an income. Before the act, an applicant could borrow against her household income, which includes her spouse’s earnings, without her spouse having to co-sign the loan. Now, she can only put down her individual earnings, so if she doesn’t draw an income, she can only qualify for a credit card if her spouse is a co-signer. For victims of domestic abuse who aren’t working, this law severely restricts their access to credit. They must either avoid credit cards altogether, hurting their credit score and access to funds, or open a joint account with their abusers. However, the CARD Act’s individual income provision does not apply to secured credit cards, so anyone who can make the down payment can qualify.
What to do if you’re in or just leaving an abusive relationship
- If it’s safe to do so, transfer your assets (income, inheritance, savings) to a separate bank account.
- Keep a copy of all important papers, such as your bank statements, birth and marriage certificates, and documents related to joint assets. Store at least one copy outside the house.
- Try to safely assess the household’s finances: where the assets are, what debts you have, and what accounts have your name on them.
- When you leave the relationship, change all of your PINs. Don’t use codes that the abuser might guess, like birthdays.
What to do if you’re out of the relationship
When you’ve left an abusive relationship, you should focus on rehabilitating your credit score and keeping yourself safe and financially independent.
- If you are still liable for any debts, send a copy of any court orders to the credit card issuer and to all three major credit reporting agencies (Equifax, Experian and TransUnion). Sometimes, explaining extenuating circumstances can help you qualify for a credit card despite a low FICO score.
- Work to rehabilitate your credit score by taking out a credit card and using it responsibly. If you can’t qualify for a regular credit card, you can get a secured credit card. These require you to post collateral upfront, usually $200 or more, and help to build your credit score. Almost anyone who can post the upfront deposit will qualify for a secured card from Capital One, Household Bank, or Orchard Bank.
- Credit unions are a good resource for low interest or secured credit cards, as many of these not-for-profit institutions reach out to those with less-than-stellar credit.
- You may not be able to get by on cash alone, especially if you need to make online payments. If it’s safe, get a checking account and store your assets there.
- If you think that revealing your social security number and other personal information will put you in danger, you can buy a one-time-use prepaid debit card. These cards are untraceable, and can be purchased at most CVS, Walmart and Safeway stores.