Many of us think that it’s only our actions that have an impact on our credit score. However, there are ways that another person can affect your credit score.
Whether you are married or not, it is possible for another person’s information to be included in your credit report, for more information on what appears in your credit report.
What is financial association?
The reason for another person showing up on your credit report, and affecting your credit score, is financial association. This is when you and somebody else become linked through a joint application for something like a credit card or mortgage. By applying together, you are acknowledging that you will have shared financial responsibility for that debt.
Financial association is not made simply by sharing the same address. If you have a roommate with horrible credit, you don’t need to worry about it affecting your credit score unless you apply jointly for something.
What do lenders see?
Part of your credit report is a list of financial associates. When you apply for a credit card or loan, the lender will see a list of anyone you have a financial association with. They won’t see their credit score on your report, but they may well check on that person’s credit rating before offering you a loan. This is because they might feel that there’s a risk your associate is in charge of your finances, or that you’re trying to conceal bad debts.
Managing financial associations
In many cases, financial associations will be impossible to avoid. There are cases where a financial association is necessary for a loan approval, such as having both your and your spouse’s income taken into consideration for a mortgage. However, you should keep track of who is appearing on your credit report. When you check your credit report, you shouldn’t see any surprises, but if you do it can be worth following up.
If you have ended a relationship, you might want to look at what financial associations you have with your ex and report any changes to credit agencies. It is important to note that the other person’s name cannot be removed from your credit report unless your financial ties are actually dissolved. This means that any joint bank accounts and credit cards must be closed first. If you have a joint mortgage, you can report the disassociation before your home is sold, as credit agencies often have a bit more leeway with these types of loans.
Associations with yourself
Another financial association you need to consider is with yourself. If you have had a name change, including through marriage, it can be helpful to link your new name to your old name. The easiest way to do this is to simply include your maiden name or other names you have used on any new credit application. This will create an alias link within your credit reports. This allows lenders to use your past credit history as part of their decision, something that can be very helpful if you have established a great credit score before your name change!
While there are many ways financial associations can help you, it is possible they can be harmful, you can find out even more here. Keeping track of your credit report is the first step to ensuring that other people aren’t hurting your chances with lenders.