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Can your spouse affect your credit score?

Written byKoyo Loans
Last Updated7th November 2022
Contents
  • In 30 seconds…
  • Introduction
  • Can your spouse affect your credit score?
  • Do medical bills affect your credit score?
  • Do unpaid parking tickets affect your credit score?
  • Do utility bills affect your credit score?
  • Does a business credit card affect personal credit score?
  • Does closing a bank account hurt your credit score?
  • Does spending more increase credit score?
  • Does taking money out of savings affect credit score?
  • Conclusion

In 30 seconds…

Before submitting a loan application, it’s helpful to understand what influences your credit score. Anything related to your credit history will affect your current score, be it unpaid medical bills, parking tickets that have resulted in CCJs, or utility bill payments that have been turned over to a debt collection agency. You also need to consider the way you manage your business finances, personal bank accounts, and credit cards to ensure they don’t negatively affect your score. The more careful you are with your financial situation, the better your credit score will be.

Introduction

Whether you’re applying for a personal loan, a new credit card, or any other form of credit for that matter, you need to be aware of your current credit score before submitting an application. Below, we explore certain aspects of your personal finances that influence your credit score, so you know what to expect before submitting a credit application.

Can your spouse affect your credit score?

Your marital status does not appear on your credit report, so the act of getting married alone will not affect your credit score. However, if you open a joint account or take out a loan with your spouse, it will appear on your credit file.

If you both manage your finances sensibly and responsibly, it will help to lift your respective scores, but if you miss repayments and encounter financial issues, you will see your credit scores reduce. The best way to look at it is that if you combine your finances with your spouse in the form of joint accounts and joint loan applications, your credit scores will become intertwined, and it’s important that you both manage your finances well.

This is why it’s really important to have an open and honest conversation with your spouse about the pros and cons of combining your finances. Some couples do it immediately after marriage, while others retain their financial independence. The key thing to remember is that both can work, so you need to arrive at a situation that is suitable for your financial circumstances as a couple.

Do medical bills affect your credit score?

Medical bills won’t affect your credit score as long as you pay them on time. In the US, medical debt is actually handled slightly different from other forms of consumer debt, and it’s important to recognise the differences.

Most health care providers don’t report to the three major credit bureaus. This means that for an unpaid medical debt to show up on your file, it would first have to be sold to a third party debt collection agency. Each provider works slightly differently, but they usually won’t sell your debt to a collection agency until you are at least ninety days overdue with your payments.

Thereafter, each credit agency then provides you with a further 180 day period to settle your debts before they show up on your credit file. The reason they offer this grace period is that medical bills are regarded as a unique form of debt, and even people with medical insurance may see delays in their medical bills being paid.

Do unpaid parking tickets affect your credit score?

Parking tickets won’t affect your credit score if you pay them on time. However, if you don’t pay a parking ticket and it results in a county court judgement against you, it will have an impact on your credit score.

If you receive a parking ticket that you plan on contesting, you should do this within the first 28 days of receiving the ticket. After the 28 day window, it’s unlikely that you will be able to appeal the fine. If you don’t pay, the cost is likely to increase, and your credit rating could be affected. At a county court judgement, the court could even send bailiffs to take your belongings to recoup the money you have not paid.

Although parking tickets can be really frustrating, it’s often just better to pay them and take your medicine. However, if you want to contest a parking ticket that you feel that you have received unfairly, visit the Citizens Advice Bureau to fully understand your rights, as well as the likely course of action, should you submit an appeal.

Do utility bills affect your credit score?

Utility bills don’t typically appear on your credit report. However, if you miss several payments, the utility company might instruct a debt collection agency to collect on their behalf, which would then appear on your credit file.

Once a debt collection agency is working on behalf of a utility company, they will open a collection account in your name. They will then send details of the account to each of the UK’s three major credit bureaus – Equifax, Experian, and TransUnion. This collections account will then become a part of your credit report. As you might expect, these are not viewed favourably on your credit file and are likely to have a negative impact on your score.

On the flip side, you might be able to include utility bills on your credit score as a way of showing your ability to make payments on time. You can check if you’re eligible for Experian Boost, which is the only way you can raise your credit score instantly. Experian Boost provides you with credits for utility, phone, and other bills, so it’s worth checking out if you’re hoping to build your credit file.

Does a business credit card affect personal credit score?

Lots of people use business and personal credit cards to keep their professional and personal finances separate. However, if you do so, it’s important to realise that your company credit card can affect your personal credit score.

For instance, if you’re the main account holder for a small business credit card, the way you manage this credit card will have a direct influence on your credit score. You will need to make sure you stick to your credit limits, keep your balance low, and make your repayments on time, just as you do with your personal credit card.

If you’re a business card holder for a much larger company, your use of the credit card isn’t likely to affect your credit score in the same way. Still, you should be mindful of how your company manages its credit card, as you don’t want their irresponsibility to have a negative impact on your credit score.

Does closing a bank account hurt your credit score?

Closing a bank account correctly shouldn’t hurt your credit score. However, if you close a bank account with a negative balance, you might experience some difficulties in accessing credit in the future.

As a general rule, bank account closures don’t appear on your credit file, so there’s no direct link between shutting one of your accounts and your credit score. But as mentioned, if you close your account with a negative balance, the bank or credit union is within their rights to send your debt to a collection agency. When managing your debt, collection agencies typically report to the credit bureaus, which will then affect your credit score.

So, if you’re planning to close a bank account, it’s really important to do so responsibly. You should first contact the bank and ensure you don’t have a negative balance. It’s also vital to consider any outstanding checks or pending transactions that are due to leave your account after you’ve closed it. Provided you have met your financial obligations and don’t have a negative balance; you can close your account without worrying about the impact on your credit score.

Does spending more increase credit score?

Your credit score is not directly related to your spending. However, if you take out multiple forms of credit to increase your spending, your score is likely to be affected as a result. If you’re spending cash that you have saved, your credit score won’t be impacted.

Experts agree that you should aim to use no more than 30% of your credit limit on any of your cards. This is because your credit utilisation is one of the most significant factors in determining your credit score, and the more of the credit allowance you have used, the higher your credit score is likely to be.

Therefore, it’s vital that you only increase your spending if you can afford to do so. It’s not good for your personal finances to drive up your spending on your credit score or to take out other forms of credit to increase your monthly expenditure. So, if you’re spending more cash than normal, your credit score won’t increase. But if you increase your expenditure on your credit cards, it will impact your credit score going forward.

Does taking money out of savings affect credit score?

The amount of money that you have in your savings account doesn’t appear on your credit report, which means you can take out as much as you like without worrying about the impact that it has on your credit score.

Savings accounts aren’t included on your credit report because borrowing money isn’t involved in the transaction, and the same is true of most current accounts. Therefore, if you need to dip into your savings to pay for a holiday, home improvements, or another expensive project, you can do so without worrying about the effect that it will have on your credit score.

In fact, using cash savings is typically the best way to fund an expensive purchase, as you don’t need to worry about your creditworthiness in the first place. Another bonus is that you aren’t subject to interest payments when you use cash savings to fund a purchase, so it certainly makes financial sense to take money out of your savings instead of applying for credit.

Conclusion

Understanding your personal finances is complex, as there are so many factors that can influence your creditworthiness in the eyes of lenders. As explored above, it’s important to be aware of the different things that can influence your credit score, so you can take the necessary steps before applying for credit in the near future.

Koyo Loans is the trading name of BETR Technology Ltd. Company No. 11483187. Registered Office: Huckletree Soho, Ingestre Court, Ingestre Place, London, W1f 0JL

Key Takeaways

As so many factors can influence your credit score, it’s important to be aware of as many as possible. Your score will only be affected by your spouse if you merge your finances and take out a joint form of credit. Your marital status does not appear on your credit file, so if you have retained your financial independence following your marriage, your spouse cannot affect your credit score.

The likes of medical bills, utility bills, and parking tickets will only affect your credit score if you don’t pay them on time, and that information is reported to the credit bureaus. In other words, it’s extremely important to pay all of your bills on time.

As for your savings, they don’t appear on your credit report, so you can spend as much money as you have without worrying about your credit score. If you take steps to close one of your bank accounts, make sure you do it the right way. The key thing to remember is to clear the balance before closing the account, as unpaid balances will reflect badly on your credit report in the future.

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