Is my credit rating affected by my partner?
Is my credit rating affected by my partner?
When you apply for credit, the lender will take a look at your credit report to see how likely you are to pay it back. The higher your credit score, the lower the risk, and the more chance you’ll be accepted. One aspect of your file that they can check that you might not be aware of is your partner’s finances.
The big question is, when can your partner’s credit rating affect you? We’ll take a look at everything you need to know and what to do if you split up.
Have you got joint credit?
You will only have joint credit with your partner if you’ve ever taken out a joint credit agreement together. If you have, then their information will appear on your credit report. This includes if you’ve ever had a loan or mortgage together, if you have a joint bank account, or if you’ve ever had a joint CCJ.
You won’t have a financial link just because you live with someone or you share bills together. Also, if you share a credit card by adding your partner as another cardholder to your existing card, this won’t financially link you either as you will still be responsible for paying the bill.
Having a financial link with your partner isn’t necessarily a bad thing. It just means that details of their credit history can appear on your report. If you and your partner both have good histories of borrowing, there’s nothing to worry about. In fact, if you’ve never borrowed and they’ve got a good financial history, this can help to improve your rating. However, if your partner has bad credit, they might find it harder to get any more credit. And if a lender sees the financial link between the two of you, they could turn you down for borrowing too.
Does changing my name affect my credit?
Changing your name, no matter what the circumstance is, should not affect your credit score. So, if you’re planning on marrying your partner and taking their name, and you’re concerned about their credit rating affecting yours, be rest assured that it won’t. Someone’s credit history can only affect another’s if they are financially linked, for example, with joint credit or a joint account.
Also, if you have poor credit and are hoping changing your name will give you a clear slate, it won’t. Your credit rating is only affected by your financial history and not your name.
What happens to debt when we get married?
If you or your partner has debt, you may be concerned whether this will affect the other when you get married. In short, it won’t. The debt is only the responsibility of the person whose name is attached to it. The only time their debt will affect you, or vice versa, is if you apply for joint credit or a joint account. Their bad credit due to their debt could have a negative impact on your own rating and lower your chances of borrowing. Additionally, if you apply for a mortgage together, your partner’s debt could prevent both of you from being accepted.
Should we get a joint account?
If you’re concerned about being financially linked to your partner, then you may be wondering whether you should open a joint bank account or not. A joint account is often beneficial if you have joint responsibilities, such as bills and rent. So, if you both have a good score, it is an advisable option to help manage your finances. However, if one of you has bad credit, then it may not be the right decision for you as this could prevent both of you from lending in the future. It’s important to look at the pros and cons of having a joint account before you open one.
How do we manage money together?
Managing money with your partner, especially when you have joint responsibilities, can be tricky to organise. The most important thing to do is be honest about your finances. Any hidden debts could end up affecting your partner without them knowing if you take out joint credit. Trust and honesty are important so that you can both make sensible and decisions when it comes to your finances.
Here are a few other tips on managing money jointly:
- Open a joint account
- Make responsibilities equal
- Create a shared savings goal
- Have a separate bank account for independent spending
What happens if we split up?
You’ll have a financial link to anyone you’ve ever taken out credit with – even if you’ve now split up. So, if your ex has bad credit and it’s stopping you from borrowing, you should get a ‘financial disassociation’.
This is where the credit reference agency will remove the financial details of your ex from your credit history. When you next apply for credit, lenders won’t see a link between the two of you anymore.
You can apply for a financial disassociation from the three credit reference agencies; Experian, Equifax, and TransUnion. The reference agencies will check to see why you want to disassociate yourself from the other person. But, as long as you don’t still have any credit agreements with them, they’ll remove their information from your credit report.