If either you or your partner has struggled with debt then you might worry how this might implicate you both. If your partner’s the one with bad credit then you won’t want this to affect your finance applications. On the other hand, if you’re the one with bad credit then you won’t want your financial history to affect your partner.
Here we have put together a guide of when this might affect you and what you can do:
Marriage and credit scores
Despite what some might think, marriage itself doesn’t automatically link a couple financially. The only way you and your partner’s finances will be connected is through some sort of joint credit account such as a bank account, mortgage or loan.
One thing you should be aware of when you get married, however, is that if you’ve chosen to change your name this can have a temporary impact on your credit record. Therefore, it’s a good idea to include both your old and new surname when making any new credit applications.
Looking for a joint account with bad credit?
If you don’t have any type of joint credit with your partner then you won’t be financially linked. This is the case whether you’re married or not. If you currently or previously have had joint finances with another person then they will be named as a “financial associate” on your credit file. When you apply for finance this means the lender will be able to see your linked financial associates on your credit file. This is the case whether you are applying finance in your own name or joint names.
You have bad credit
If you have bad credit then you might have found it difficult to apply for any type of finance. The most effective thing you can do if you have bad credit is to work towards improving your credit score. This can help your improve your chances of being approved when you do apply for finance. You can still apply for personal loans and finance including bad credit car finance. Taking out finance through a bad credit lender can actually help to improve your credit score over time, providing you make the required payments on time each month.
Your partner has bad credit
If your partner has a poor credit history they should also do what they can to improve their credit score. They might actually be more financially stable now but made some mistakes in the past that are weighing down their credit score.
The best thing you can do is understand exactly why they are in this situation. Then you can give them the right help and support to fix their credit score. This might mean encouraging them to cancel their credit cards or pay off their existing debts. Or they may require further help and support from a debt advice organisation.
Joint and several liability
You will only be held responsible for debts that are in your name. If you share a bank account with an overdraft then you should make sure you regularly monitor the balance. For the most part, any accounts solely in one of your names will be your own responsibility. For any joint accounts, you might think that you’re only responsible for half of the loan. In reality, you will actually have agreed to pay off the entire debt if the other person can’t or won’t pay. It makes no difference who spent the money, you will both have joint responsibility and liability for any joint debt.
Other things you can do to help
Talk about it
The first step to dealing with debt problems is by talking about it. Before taking out any joint finance with your partner you should both sit down and discuss your credit history. Don’t try and keep your financial situation a secret from your loved ones. If you do have any debts then your partner deserves to know exactly how this might impact your relationship now and in years to come.
Check both your credit ratings before applying
You should both check what is on your credit file before applying for any type of finance. You can do this online through credit reference agencies such as Experian or Check My File. This will allow you to get a better idea of the rates that you and your partner are eligible for. Checking your credit scores together will allow you to both be completely transparent with one another about your financial history. This can help you both to make the right decisions when it comes to your finances.