Debt and Credit

Can Your Family Affect Your Credit?

Taking out joint debt with your family can tie them to your credit file. Take a closer look at these

Family ties can build a strong bond. But can your family members ever influence your credit? The short answer is “yes.” If you take on joint debt with a family member, your credit file could be tied to theirs for as long as the debt exists.

Take a look at three common family situations that could impact your credit.

Will my credit be affected if I…

…get married or divorced?

The act of getting married does not materially impact your credit score—for better or for worse. “There’s nothing on a credit report that indicates if you’re married,” says John Ulzheimer, a credit expert formerly with FICO and Equifax. “There’s also no such thing as a joint credit report.” If you get married, you and your spouse will still each have your own credit file, regardless of whether you’ve merged your finances completely or kept them separate (or some combination of the two).

Instead, marriage has what Ulzheimer calls a “dotted line impact,” meaning that signing jointly with your spouse for a loan, mortgage, credit card or other debt could eventually impact each of you. Both credit scores will be checked to approve any joint applications, and late payments or delinquency will affect you both.

Just like getting married, a divorce itself will not directly change your credit score. However, any remaining joint accounts will still appear on both your and your ex’s credit reports following the divorce. You’ll likely need to align your budget with your individual income and keep an eye on your accounts to make sure that timely payments are made.

…help my child go to college?

When a child prepares to leave for college, it can be a great time to talk with them about responsible credit use, especially if you are co-signing a student loan or signing them up for a credit card. (While you generally must be 21 to open a credit card, parents can co-sign for their children at age 18 or add them as an authorized user even younger, depending on the card issuer’s rules.)

It’s important to understand that from a debt obligation perspective, the co-signer of a loan is treated basically the same as the primary signer. “These two people are equally liable for the loan,” Ulzheimer says. Even if your child has agreed to make the monthly payments, as the co-signer you are responsible for any payments the primary signer misses, which could impact both of your credit scores.

Jointly opening a new credit card account also opens the door for your credit to be impacted by your child’s actions. Instead, consider adding your child as an authorized user on your existing credit card. Being an authorized user is more like having a “credit card with training wheels,” Ulzheimer says. The user can be removed at any time, and some cards even allow the primary cardholder to set limits on the authorized user. Or, set your child up with a secured credit card and let them start building good credit for themselves.

…manage a loved one’s affairs after they die?

Generally, family members and heirs are not responsible for paying a person’s debt after they pass away. When a person dies, their debt passes to their estate, and remaining debt will be paid out through the estate’s assets.

If you have joint debt obligations, however, you will still need to pay off that debt. As long as you are a co-signer on that debt, such as credit card debt or car payments, you are responsible—now solely.

Another thing to keep in mind is that even though you may not be responsible for the deceased’s liabilities, debt collectors may try to contact you anyway. It’s illegal for them to harass or intimidate you, so if you receive unwanted phone calls from creditors, refer them to the executor of the estate.

Remember: The best way to keep on top of your credit score in any scenario is to make debt payments on time and to have open, clear communication with anyone who shares a credit account with you.

Smart ways to handle your credit 

Check out more resources for managing credit with your family, and learn how a secured card may help.

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