How your individual circumstances affects your credit report in different ways

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How your individual circumstances affects your credit report in different ways

30th August 2010

Throughout your lifetime, your circumstances can change in a number of different ways. As this happens, your free credit report is also likely to adapt as you make decisions which are related to the problems you have been confronted with. In this article, we are going to show how one of the most common life-changing scenarios, sharing your financial commitments with a loved one, can take an impact on how you handle your credit and how this documented in your own individual report.

One such example can be living with someone else. If you are in a long-term relationship and you feel that you are ready to move into a house with the person you love, you can find that the financial obligations you may have (such as your utility bills) and your bank account setup can change. In some respects, this could change the dynamics of your credit rating – particularly if you have good credit where your partner may not.

Of course, when you live alone, a lack of payment in order to satisfy your credit agreements is your problem and your issue to sort out. However, issues that are pertaining to a lack of payment in an agreement with a lender that is jointly owned by you and your partner is a problem for the both of you.

There could also be situations where you are chased for another person’s debt. For example, imagine you are the ‘guarantor’ for another person’s financial liabilities if they are unable to pay themselves. From then on in, it is your priority to ensure that any of the debts that remain from their financial background are obliged.

Interestingly, there are payments for some items which extend to everyone in your household, and not only the person you are a partner with. Such an example is council tax, and there other types of bills which have a similar policy.

It is not fun to be pessimistic and to think from a ‘what if?’ point of view, but you need to ensure that you are financially protected for everything you could experience. It can be great to share your finances with the person you love, but this could damage your reputation and your chances of getting credit if they have had a turbulent financial past. Through the use of a ‘living together’ agreement, you can also ensure that any jointed credit interests you might have can be distributed between you and your partner in the event of a separation. This is because such agreements are legally binding documents which a solicitor would use to mediate between the decisions that the two of you would have to make.

It all seems a lot more complicated when you read through everything that is addressed in this article. However, through taking the time to work out the different necessities for merging your finances, you can ensure that you put the right foot forward for a great life together.

Posted in Credit rating

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