How other people can potentially affect your credit score

For most of us, at some point in our lives it’s quite likely that we’ll end up holding financial products with another person.

Whether married or in a civil partnership, or living with someone who is a partner or a friend, you may well have a joint bank account, a credit card with two cardholders, or a mortgage in both your names.

This is likely to have an effect on your credit report, so it‘s worth understanding just what this means. To understand the impact joint accounts could have on your future credit-worthiness, you should review your own credit report to get a complete overview of your own credit history.

Financial association

When you apply for credit with another person, for example a credit card, loan or mortgage, your credit reports become linked – known as a ‘financial association’. Your name (though not any financial information about you) will appear on the other person’s report and theirs will appear on yours under the section marked ‘Financial associates’.

When you want to apply for a credit card in your own name, even though your ‘associate’ hasn’t applied for the card, the lender will see their name on your report. The lender may well then take into account the information on their credit report – their reasoning being that they may think that the way the other person manages their money might have an effect on your ability to make your payments.

Providing that you both keep your credit reports in good order – by making sure you keep up to date with repayments and don’t take on any unmanageable debt – then you can reduce the risk of being turned down for credit. However, if your associate has a poor credit report then it can affect whether you get credit yourself.

Your Experian Credit Score [1] is a guide, that will help you understand how your credit history is likely to be viewed by lenders, and will also help you both understand if one partner’s credit history needs a little work before any joint credit applications, such as a joint mortgage, are made.

Some lenders give you the chance to have any application assessed on your credit report only. This is known as ‘opting out’ and means that your associate’s information won’t be taken into account. However, lenders reserve the right to run checks just in case you’re trying to hide bad debts relating to your financial associate.

Name changes

If you have got married and changed your surname, then it’s a good idea to also include your maiden name on any new application for credit. This creates an ‘alias’ link between the two names, which would allow both names to appear on your credit report going forward. The lender would then include both names on any credit check it makes. It’s also worth registering to the electoral roll in your new surname as soon as possible.

Divorce and separation

When a relationship ends, the financial association stays on your credit report unless you ask a credit reference agency (CRA), such as Experian, to remove it. The link can only be broken if you no longer have a financial relationship with the other person. So, if you still hold a joint account or a credit card, you’ll need to close it down before you can be ‘disassociated’. You can do this by notifying the CRA that you’re no longer financially linked.

The exception to this is if you still hold a joint mortgage. When couples split up, it might not be possible straight away to sell their home, so CRAs take that into account.

Other people at your address

A common concern is whether other people who live at your address will affect your credit report. As long as they are not financial associates then the answer is ‘no’.

So if you share a flat with someone and they have a history of bad debt, this will have no effect on your credit report if they’re not linked with you.

As long as you keep your finances completely separate, your credit reports will stay separate even if you live together or share the same surname. By checking your credit report you can see if you are linked or not, and the steps you could take to improve your credit rating.

You can get help finding finance deals that suit your credit profile, and see your credit report and Experian Credit Score whenever you want, with Experian CreditExpert [1] membership.

[1] A Monthly fee of £14.99 applies after your trial. You may cancel during your 30 day trial without charge. 30 day free trial available to new customers only. Trial period starts on registration – further ID verification may be required to access the full service which may take up to 5 days.