Finding a loan is a process that can sometimes seem quite difficult and stressful. If you are living with a partner, married, or reliant on the income of another person to cover household expenses, you might be worried about the impact that person’s credit score could have on your own ability to be successful when applying for a loan. In the past, studies from credit ratings agencies, such as Experian, have concluded that one in six people have seen a credit application damaged because of someone else’s credit history. This could sometimes be a partner a person currently lives with, a former housemate from university times, or even an ex-partner with a lingering financial impact on their life.
It is one thing for you to have a bad credit score and to be looking at ways to move forward and away from the damage this can cause to your long-term credit options, but it is quite another to be held back because of someone else and their own actions with finances over the years.
What type of people can impact my credit score?
Any person who you have shared a credit account with, in your past, could have an impact on your personal credit score moving forward. In most cases, this is an ex-partner or spouse, as it is often expected when couple’s live together or get married that they open a joint bank account for example, to pay the bills or as a savings account. This could also be a family member though, or an old housemate, if you had a shared bills account.
Why does this impact my credit score?
This shared responsibility of credit means that you continue to share a link with their credit beyond those times. Your entire credit history will be viewed when an application for a loan or another line of credit is made. If you have joined your credit with another person’s in the past, their own credit file will become part of your application process, and your credit file will become part of their credit application too.
The other person’s personal information is not on your credit file, nor yours on theirs. When a lender searches for your credit file when you make a credit application, they will see the relevant information relating to that other person without seeing any specific information about them. There will be an attached note to indicate that there is another credit file linked to the one they are looking at, allowing them to retrieve that information.
How to move on from a credit connection?
There are a few actions you can take to ensure you are not linked to another person’s credit file for the rest of your life. You can apply to each credit agency for an official note of disassociation, cutting the ties with that person officially in the eyes of any lender when you make a credit application. You should also be a lot more careful in future over who you build these ties with. Swap credit scores early on if you are planning on setting up a joint account, for instance. If things go bad between you and this person, act swiftly to repair any potential damage to your personal credit score, as it could make a big difference when applying for a loan in the future.