Whether it’s a family member, a housemate or a friend, it’s not uncommon for people to feel concerned by debt even if it isn’t their own. This may be concern about the possibilities of your finances becoming linked in some way and their debt problems having a negative impact on your own credit rating, or it may simply be a case of worrying about your loved one’s own wellbeing, but in either case we hope that the following advice and information will help to ease your concerns.
How Do Finances Become Linked?
A common worry is that living with somebody, acting as a guarantor for them or entering into a joint financial arrangement can cause your finances to become linked, allowing their debt to negatively affect your credit score.
Luckily, in most cases, this is completely unfounded – simply living under the same roof as somebody, for instance, will no longer cause your credit files to be linked or any financial association to appear on your report. Likewise, simply being in a relationship with or even married to someone won’t cause your finances to be automatically connected; for that to happen you’ll also need to participate in a joint financial venture such as taking out a mortgage or unsecured loan. In this case, your family member may appear on your credit file as a financial association. Even then, their debt history may not have any impact on your ability to get individual credit – it will simply be available for creditors to see.
In the case of a guarantor things are a little more complex, but you still shouldn’t find that a past debt has any impact on your credit file. That said, any debt that accumulates on the loan that you’re acting as a guarantor for will have a negative effect – so you will be linked for that single item.
How Can You Help a Love One?
Now that the weight of having your own finances affected is hopefully off your mind, you may still be concerned about helping somebody else with their debt for their own sake. Our advice is to offer both emotional support and practical support; if they already have a plan for getting out of debt then you can simply provide encouragement, if they don’t then you can help them to form one.
Of course, this doesn’t mean that you should go out and try to become an instant expert, but rather that you can suggest services which your friend or family member can use to build a plan that works. As a debt management company in Scotland with experience providing exactly that type of assistance we could be one such solution, and you can certainly pass our details onto anybody you may be concerned about – just remember to do so in a tactful and respectful way. We can be contacted online or over the phone at 0800 011 2322 and will always be happy to help in any way that we can.