Not surprisingly, many people assume that it’s just their own behaviours that have an effect on their credit score, but there are circumstances where another person can affect it as well. The reason for another person appearing on your credit report and influencing your credit score is by financial association.
This is when you and another person are linked through a joint application for credit like a mortgage or a credit card. By applying together you are both accepting that you will have responsibility for the debt. One of the most common forms of financial association is through marriage when both yours and your spouse’s income are considered when applying for a mortgage.
It’s important to note though, that a financial association is not made by simply sharing the same home address. For example, if you have a housemate with a bad credit history then it won’t affect your credit score.
But part of what creates your credit report is a record of any financial associates you may have. So when you apply for any credit the would-be lender will see a list of anyone that you have a financial association with. While their credit score won’t appear on your report, the lender might inspect the other person’s credit rating before advancing you a loan.
If the relationship has ended, you may want to check any financial associations you have with your ex-partner and notify credit agencies of any changes. However, it is very important to understand that if you have any credit cards and/or joint bank accounts they must be closed first, as the other person’s name cannot be removed from your credit report unless your financial bonds are dissolved.
One more financial association you may need to think about is one with yourself. For instance, if you have changed your name through marriage it can be an advantage to link your new name to your maiden name. This can be extremely helpful if you have established a good credit score before you changed your name. The simplest way to do this is to include your maiden name on any new loan application. This will then create an alias in your credit report which allows lenders to consider your past credit history when deciding on any loan application.
It’s worth considering though, that while financial associations can be of benefit, they can also be harmful to your credit score. For this reason, it’s a good idea to be certain of who appears on your credit report to avoid any surprises and also to be sure that other people aren’t damaging your options with lenders.