YOUR credit score can have a huge impact on you getting loans, credit cards or mortgages – so what if yours is damaged by a family member borrowing money in your name?
It comes as a Reddit user was left anxious after her partner’s mum got into £1,500 of debt in a credit card account under his name.
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She said they were looking to buy their first home so her partner tried to get a credit card to build up his credit score but kept getting rejected.
The couple then discovered his credit score was just 175 out of 999 on Experian, which means it’s very poor.
The posted explained: “Turns out a few years ago his mum asked for his permission to set up an account with Ace/Studio in his name to make purchases for the family which she would pay for with the intention of building up his score,
“Obviously it all went sideways and payments stated to get behind and build up, leading to his low credit score.”
She said she doesn’t want to cause any family problems and asked what the best way would be to rebuild her partner’s credit score.
We spoke to James Jones, head of consumer affairs at Experian and he explained people’s rights in this situation.
“If someone takes out credit in your name, whether they are known to you or not, it is technically identity fraud and could land them in trouble – certainly if reported to the police,” he began.
The credit score expert said the first step to remove the debt on your credit report is by letting the card provider know of the circumstance.
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Then your credit score should be able to restore quickly if the card provider agrees to move the debt from you to the person that took out money in your name.
“If your parents are happy to take ownership of the debt then the provider should be able to deal with them directly,” he continued.
“If the card provider accepts that the reader is not responsible for the debt, all record of it should be removed from the reader’s credit report and their credit score fully restored as soon as the information is updated.”
However, if the debt isn’t removed from you, even if it is paid off, the information would stay on your credit report for six years.
Although the debt cleared, it could still harm your credit score due to payments missed previously.
How to improve your credit score
WE explain how to improve your credit score.
- Don’t make too many credit applications – Making lots of requests in a short period of time can be seen as a sign of financial distress – and each application will be recorded on your file. Use a “soft-search” eligibility calculator to show how likely you are to be accepted.
- Always pay your bills – Late payments are also recorded in your file so make sure you pay your monthly bills on time including utility and credit cards.
- Pay down your debt – Try and cut down your existing debt before applying for new credit as lenders may be reluctant to lend to you if you already have a large amount of debt.
- Use a credit-builder credit card – These cards tend to have high interest rates compared to normal cards but if you can show you’re a responsible spender with them, it can improve your chances in the eyes of lenders.
If your parents borrowed the money under a joint account with you, you could ask your credit rating company about financial disassociation to reduce the impact on your credit score.
A spokesperson for TransUnion said: “For individual credit agreements, credit facilities should only be used in line with the finance provider’s own terms, and payment behaviour will be reflected in that individual’s credit score.
“Someone else’s credit history can only affect your credit score if you previously made a financial connection by having a joint agreement.
“If you had a financial association with someone but no longer share any joint accounts or financial connections, you can formally disassociate yourself, so their financial behaviour cannot impact yours.”
We round up nine ways to improve your credit score, including registering to vote and credit builder cards.
Meanwhile, here’s how you can get a mortgage if you’ve got a poor credit score.
Plus, these are the credit reference agencies that include Buy Now, Pay Later on your record and we explain how it affects you.
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This post first appeared on thesun.co.uk
