I came across this question on one of the forums the other day and thought it would be useful for you to see.
Q. A few years ago I took out a joint mortgage with a friend along with mortgage protection insurance. The mortgage and the insurance premiums have always been paid in full and on time. Unfortunately my circumstances changed and I was unable to keep up the payments on my credit cards and personal loan. (mortgage still paid on time) So I ended up with a debt management programme. I mad it clear from the outset that my problems should in no way have any affect on my friends ability to get credit. However some six months after my starting the programme they were decline a credit card because of their financial relationship to me. What can be dine to resolve this?
OK I have not given names and shortened the question so as to protect the people concerned, but you can see the problem.
There is no easy solution to this as a number of factors need to be considered, are they still living in the same house, has one moved out? If so which one? Have they sold the house?
The first thing to do is to approach the credit agencies and ask for a notice of disassociation to be put on both credit reports. This quote is taken from Experian’s online faqs
“If the only financial connection you have is a joint mortgage, we can create a disassociation between you and your ex-partner, providing you no longer live together”
Now the quote talks about ex-partners but I should see no reason why it shouldn’t apply to friends who are also in this situation.
I would also suggest that the friend should if possible take on the mortgage in their name only, as it appears that they were paying it anyway. As this would also help to break the association between them.
Finally they both need to work on improving their credit scores by checking everything that is on their credit reports and challenging anything that is wrong one thing at a time. This will take time but does improve the credit score. They also both need to make sure all outstanding debts are paid in full and on time.
This is an example of how someone through no fault of their own can get a bad credit rating and how this can affect their ability to get credit.