Are joint finances stopping you getting credit?

Heard of the saying ‘What’s mine is yours, and what’s yours is mine’?

It might not be the case when it comes to sharing your last chocolate, or the duvet, for that matter, but if you have joint finances with a partner, family member or even a flatmate, it’s definitely true.

That’s because when you apply for credit with someone else, you automatically become financially linked with them – this is called a financial association.

Their name will appear on your credit report and vice versa – you’re totally committed to one another in the eyes of lenders, even if you might not be in real life!

Is that a problem?

It depends. Someone else’s finances won’t impact the ‘credit rating’ that the credit reference agencies give you. However, being financially associated does means that lenders may look at the other person’s report as well as your own when you apply for credit.

If you both manage your finances well and have good credit, you’ve nothing really to worry about. However, if the other person has poor credit (or again, vice versa), it could be bad news. Lenders may look at their report, see missed payments or lots of unpaid debt, and think that you’re too risky to lend to.

What counts as joint credit?

Your credit reports will be linked if you have a:

-          joint bank account

-          loan taken out in both your names

-          joint mortgage

-          joint CCJ

-          broadband or utilities contract in both your names (however, not all providers report to the credit reference agencies, so check with yours)

You won’t be linked to someone just because you live with them, or are even in a relationship with them. You must have applied for credit together.

Can I ‘un-link’ myself?

Yes. Whether it’s an ex, a friend or someone you used to live with, as long as the debt is paid off, you can just ask the credit reference agencies to remove the person from your credit report. This is called a notice of disassociation. 

What if it’s my current partner?

The same applies - as long as you pay off the joint debt you have (so it’s probably not possible if it’s a mortgage), you can ask the credit reference agencies to disassociate you. You might want to do this if one of you has bad credit. You can then relink yourselves by applying for credit again once their credit rating has improved in the future.

How do I apply for a notice of disassociation?

Remember, you’ll need to make sure that the credit you took out jointly is paid off before you apply for one. You then need to contact the credit reference agencies and tell them you want to issue a notice of disassociation. You’ll find their details on their websites below:

Experian

Equifax

Transunion

It’s a good idea to check your report with all three agencies as they each hold different information for you. 

The credit reference agencies will then carry out various checks to make sure that the financial association has genuinely ended and, if they’re happy, they’ll remove the person’s name from your report.

That means that their credit rating now won’t be taken into account by lenders when they’re deciding whether to lend to you or not. Consider it a financial divorce.

I don’t know if I’m financially linked to anyone?

To see who you have financial associations with, you can find out via any of the aforementioned credit reference agencies. Here's how to check your credit report for free.