The last thing you want as an adult is something to mess up your credit report, but when you have met that someone special, joint credit agreements in the future are a very real possibility.
From mortgages, joint bank accounts and loans, the moment you make a joint application a link is automatically created on your credit report.
Once linked it is possible that their credit report will be taken into consideration on any future credit application you make.
Before you enter into financial association with anyone it is imperative you are open and honest with each other about your current financial commitments and you credit history.
My better half and I had to have a similar chat about this last year when it became apparent he was struggling to get from one month to another.
A check on his finances revealed he had overstretched himself and the crazy interest rates he were paying were eating his money away within a week.
Luckily for us my boss is pretty awesome. I explained the issue and that I could get a loan if needed to pay off his debt, which he would then pay back to me.
He didn’t want me to pay so much in interest and paid it for me on and a monthly sum was taken from my wages until it was paid up in May.
Now his credit file is clear and he’s a safe bet to apply for a joint credit agreement with, however, before the intervention of my boss and I, he could have severely affected my credit score.
In this short guide I’ll explain how your credit files become linked and how you go about unlinking them.
When do you become financially linked?
Don’t worry, just by deciding to move in together will not link your credit files.
The only way you can become financially linked to someone is by applying for a joint credit agreement with them such as a mortgage or a loan.
They would then appear on your credit report as a ‘financial associate’.
If you marry someone the same rules apply. Marrying them doesn’t create a financial link, only applying for joint credit agreements does.
How do I remove a financial link from my credit report?
There are certain steps you will need to take to remove a financial link associate from your credit report.
Close joint accounts
If joint accounts are left open, you cannot remove a financial associate from your credit file. They would need to be closed or transferred to an individual account.
Once you have done this you can ask credit reference agencies to place a notice of disassociation on your credit report, which should stop your former associates actions having a detrimental affect on your credit score in the future.
Breakups and divorce
If you have gone through divorce or have separated from your partner you’re still financially linked to them.
Until all of your joint accounts are closed and the financial association is removed by the credit reference agencies, their future actions – such as taking out more credit – can impact on your credit score.
When it comes to your credit report and credit file you should always act on the side of caution.
Be honest with your partner and make sure applying for joint credit is only going to be of mutual benefit and not detrimental to each other’s credit score.
It will save a lot of hassle in the long run.
If you are permanently separating from you partner it is vital you act quick to unlink your credit files. The last thing you want is someone else’s credit history affecting your own score and future.
Have you ever been adversely affected by someone else’s credit score?
He is also a contributor to Clear Debt, ICOUNT Money and M1 Debt Advice blogs discussing all things personal finance.