If you are considering applying for a loan, credit card or perhaps a mortgage, you may be wondering whether your lender would reject your application on the basis that you are linked to your partner, whose credit record is poor. Alternatively, you might be the one with the poor credit file, and hope your partner isn’t hindered by his or her association with you.
It is true that any joint application for credit automatically creates a financial ‘link’ between the two of you. This will appear on both your credit reports when future lenders conduct checks on you. Wonga defines a credit report succinctly on their ‘Low Credit Score?’ page, “A credit score is calculated using information contained in your credit report, including account information, payment history, and public records and enquiries (as well as requests from other credit providers to view your credit record.) Your score is a summary of positive and negative factors that determines whether or not you’re likely to honour future credit agreements.”
There is no getting away from your credit record, but if you have a low score, it can change fairly quickly as your financial habits improve. You can also check your own credit record online whenever you like, to see how this improvement progresses.
We dispel a common myth…
However, many people think that when they get married, their credit reports will merge into one. Investopedia says that this couldn’t be further from the truth, “As a married couple, you will maintain two separate credit records and histories. That’s because you each have different Social Security numbers. And how you deal with the credit you take out together will be reflected in your own credit histories.”
So, will your low credit score affect your partner? In short, yes – but there is a lot of positive things you can do to rectify this.
Keep your own accounts active – Don’t settle for one big joint account. Keep you own, individual accounts going. This means you can maintain your own active credit record.
Always pay on time – Any payments, whether these be existing debt, credit card, bills or rent, should be paid on time. This is the fastest and easiest way to improve your own credit rating. You can quickly see your credit file recover on a monthly basis when you address your payments sensibly and pay everything on time.
Be honest and responsible with your debts – Be open with each other about what debts you have, and why your credit report is low. Both of you may suffer if you maintain a joint account and one of you is irresponsible or forgets a loan payment. A relationship needs communication to ensure everyone is on the same page. Always aim to pay debts off in time. If you’re struggling, call the company or lender and explain your situation to see if it is possible to create a different repayment schedule.