Can someone else's debt affect my credit rating? Part 1
If you’ve got a relatively clean credit history, or you’re looking to improve it, you might wonder if your credit report could be damaged by another person’s debt.
Well, it’s a fair question, because the cases where you may suffer damage to your credit history aren’t exactly crystal clear.
In essence, the only way someone else’s debt can ever affect your credit history is if you are financially tied to them. So, if you’re concerned about someone that doesn’t fit this criteria, you can relax now.
To check, ask yourself whether you’ve got a joint account with someone, or if you’ve made a joint application for credit or received a joint County Court Judgement. If any of these are a yes, then you’re most likely financially tied. If you check your credit report online, you should be able to see any financial associations you have.
So, if you’re worried about someone that you are financially tied to, we’ll go through the potential candidates below to help you get to the bottom of things.
Your spouse or partner
Dependent on how far into your relationship you are, you may or may not have financially tied yourselves together just yet. Remember, being married or living together doesn’t mean your credit reports are automatically tied! They only become tied when you have a joint form of credit together.
When applying for joint credit together, you might struggle if your partner has a poor credit history – however it’s a bit more complicated than that. If you have an excellent credit history, you shouldn’t come across many issues finding credit, even if your partner has a questionable history. However, it may be the case that if your history is pretty average, your partner’s credit history might make a lender reject an application that would have been accepted if it was just you applying.
On top of this, as mortgages have rigorous affordability checks in place these days, you may find that any problem debts in your partner’s financial past could prevent you from getting the mortgage you want. This is because a lender will go through both of your credit histories to see whether you’ve managed credit well in the past and to make sure your outgoings aren’t too extensive.
If you’ve now split from your partner, it’s understandable if you’ve got some concerns about whether your credit history can still be affected by them. Put simply, any joint credit agreements you have entered into can affect your credit rating if you don’t continue to repay them. On the other hand, any of your partner’s debts that are in their name only won’t have any effect on your report.
Unfortunately, things don’t always go to plan, and some separations can turn quite nasty. If your split isn’t amicable, it’s important to get your joint finances in order. Should your partner continue to spend on a joint credit card, for example, this debt will appear on your credit report. To fix this, get in touch with your card provider, bank or lender and request that either the account is frozen or that both of you must agree to any withdrawals.
Make sure to remember that if your account is frozen, both you and your partner will have to agree to unfreeze it. If things really have turned sour, redirect your wages and transfer your standing orders into your current account so your income doesn’t end up tied into a frozen joint account.
A good place to start if you and your partner have separated is to get in touch with the three credit reference agencies (Callcredit, Experian and Equifax) and apply for what is called a “financial disassociation”. This should remove them from your credit report. To qualify for this, you must have been living at a separate address for the past 6 months, and you mustn’t share any financial ties.