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How does borrowing together affect your finances?

Understand how joint credit can affect your finances now and in the future.

Are you deciding whether to open a joint account with your partner, friend or housemate? Having a joint account often makes it easier to pay bills when you’re living with someone else but before you make a potentially life changing decision, you may want to consider their financial record.

Currently there are four types of products that form a financial connection. These include joint mortgages, joint loans, joint bank accounts and, in some circumstances, your energy bills. (Don’t panic, a financial connection won’t be formed if you both appear on a utility bill, this only happens when providers are sure you and whoever you live with are a couple, i.e. the bill states ‘Mr and Mrs Smith’.)

Why does it matter?

Once you have opened a line of credit with another person, such as a loan or a mortgage, you are financially linked to them. This means that when lenders look at your credit report, the credit history of the person linked to you is also visible to them. This is normally nothing to worry about but if the person you’re linked to has a poor credit score, this could have a negative impact on the deals being offered to you both.

What precautions should you consider before borrowing together?

Recent research highlights that 15 million Brits have never checked their credit reports, and therefore are unaware of their scores. This is hardly surprising when the process of doing so is complicated, clunky and expensive.

These barriers to your score need to be removed so that, before you apply for joint credit, both parties are aware of the other’s financial history.

ClearScore will give everyone a free credit score and a credit report so that you always know where you stand. Knowing exactly what’s happening with your credit report and credit score could save you from an unpleasant surprise in the future.

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