Maintaining,Your,Rating

　　Divorce may no longer be socially unacceptable but can impact your creditworthiness. So, while filing for divorce, you must be careful if you have taken a joint loan with your spouse or acted as the “guarantor” of a loan taken by him/her.
　　To understand the impact of divorce on credit history, let’s see how lenders and credit information bureaus, which rate people’s creditworthiness, treat joint loans.
　　 In a Bind
　　The main aim of applying jointly is to take a higher loan. When you apply for a joint loan, you and your spouse enter into an agreement with the lender to pay your respective dues. A default will hit the credit history of both.
　　If you agree to be the guarantor of a loan taken by someone, you take the responsibility of paying if the borrower defaults. This is not all. In such a case, the lender may assume the outstanding loan in your account. This means when you apply for a loan, the amount sanctioned could be arrived at after deducting the outstanding amount of the loan for which you are the guarantor.
　　“You are legally responsible for another person’s debt if it is joint or you have agreed to be a guarantor (someone who would pay a person’s debts if he/she couldn’t). If a debt is in two names, both are responsible for paying it back,” says Mohan Jayaraman, managing director, Experian Credit Information Company of India.
　　Since you are responsible for repayment in both the cases, your credit record can be hit by the action of the other person.
　　 Marriage to Credit Bureau
　　When you apply for a joint loan or become a guarantor, the lender reports this to credit bureaus. Based on the lender’s information, the bureaus enter the loan amount separately against the accounts of both the partners, who are responsible for repayment individually.
　　However, the report will clearly categorise it as a joint loan. Similarly, if you are the guarantor to a loan, your credit report will show the loan in your account but in the capacity of a guarantor.
　　“When lenders share information with us that you and your spouse have a joint loan, or you are the guarantor to a loan, the account is flagged accordingly in the credit information report as joint, guarantor, individual, etc, and complete account information , including account number, current balance, date of last payment, etc, appears on your credit information report,” says Mohan Jayaraman of Experian Credit Information Company.

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