Can Someone Else's Debt Affect Your Credit Score? (Australia)

Quick Answer: Yes — another person's debt can affect your credit score in Australia in three specific situations: joint credit accounts (where both parties are equally responsible for the debt), guarantor arrangements (where you've guaranteed someone else's loan), and incorrectly recorded financial associations (rare but documented). Simply being married to, living with, or related to someone with bad credit does not affect your score — Australian credit scores are individual, not household. Only formal legal financial connections create cross-contamination. If you have joint account entries or guarantor listings on your file that you believe are incorrect or should be removed, Australian Credit Solutions can assess them under the Privacy Act 1988. 98% success rate. No Win No Fee. ASIC ACL 532003. Industry Excellence Award 2022, 2023 & 2024. 4.9/5 from 976+ reviews. 5,000+ Australians helped since 2014.

One of the most anxiety-inducing questions we get from clients in relationships: "Does my partner's bad credit affect mine?" The answer — and the exceptions — are critical to understand.

How Australian Credit Files Work: Individual, Not Household

Your credit file in Australia is individual. It belongs to you personally, linked to your name, date of birth, and address history. There is no such thing as a "household credit score" or "couples credit file."

Your score is entirely unaffected by:

• Your partner's or spouse's debts
• Your parents' financial history
• Your adult children's credit problems
• Your housemates' or flatmates' defaults
• Any person you know simply through social or family connection

The only exception: formal legal financial connections — where you have jointly signed a credit contract or provided a legal guarantee.

Situation 1: Joint Credit Accounts

When two people apply for credit together — joint home loan, joint credit card, joint car loan — both people's names appear on the account. This creates a joint credit liability where each person is equally responsible for the full debt.

What this means for your credit file:

• The account appears on both credit files
• All repayment history (on-time or late) appears on both files under CCR
• If the other account holder misses a payment — that late marker appears on your file too
• If the account defaults — both credit files receive the default listing
• If the other person stops paying entirely — you remain fully liable and your score suffers

This is the most common way another person's financial behaviour directly damages your credit score. Joint home loans are the most significant — a partner who stops paying the home loan after a separation creates default risk on both files. For more, see our guide on does paying off debt improve your credit score?.

The separation problem: When couples separate, joint accounts don't automatically split. Both parties remain liable until the account is formally restructured, refinanced into one name, or settled. During this period, whoever falls behind on payments damages both credit files simultaneously.

Situation 2: Guarantor Arrangements

When you act as guarantor on someone else's loan — typically a parent guaranteeing a child's home loan or car loan — the obligation appears on your credit file.

What typically appears:

• The guarantee creates an enquiry on your credit file (the lender checks your credit)
• The guaranteed loan may appear as a contingent liability on your file
• If the primary borrower defaults and the guarantee is called upon, the liability becomes active on your file
• If you're called upon to pay and cannot, your own default listing follows

Many parents guarantee their adult children's home loans without fully understanding the credit file implications. If the child subsequently has financial difficulties, the parent's file — and therefore the parent's future borrowing capacity — is directly compromised.

Situation 3: Incorrectly Recorded Financial Associations (Rare)

In rare cases, credit bureau data errors can create incorrect financial associations between people who share an address — particularly in high-density residential buildings where multiple credit applications from the same address can be confused.

Symptoms of incorrect financial association include:

• Enquiries on your file from companies you've never dealt with
• Account histories for products you never applied for
• Defaults listed in your name for debts you've never incurred

If you find entries on your credit file that don't belong to you, check for identity fraud first (someone has used your details) and incorrect financial association second (a data error has linked another person's file data to yours).

The Financial Separation Checklist After Relationship Breakdown

Protecting your credit file during or after a separation requires specific actions:

Case Study: Claire, Canberra — Joint Mortgage Default After Separation

Claire, 37, an APS officer from Gungahlin, separated from her partner in 2023. The family home was in both names with a joint Commonwealth Bank mortgage. Her ex-partner stayed in the property and agreed to cover the mortgage during settlement negotiations, but stopped making payments after 4 months. Neither party had formally restructured the loan.

By the time Claire became aware of the missed payments, two 30-day late markers and one 60-day late marker had appeared on her Equifax file — brought there by an account she hadn't touched. Her score dropped from 711 to 598.

Australian Credit Solutions reviewed the file. Claire had formally notified CBA of the separation and requested account restructuring — the lender had failed to act on this notification despite having the obligation to consider hardship arrangements. The missed payment markers during the period after her formal notification were disputed on the basis of lender failure to respond to hardship communication under the Banking Code of Practice (referenced in conjunction with the Privacy Act 1988). Two of the three markers were removed. Score recovered from 598 to 664.

Claire paid nothing until we succeeded.

Get a free assessment from Australian Credit Solutions →

How to Protect Your Credit File in Relationships

Before entering financial commitments:

1. Discuss credit file histories openly before signing any joint credit products
2. Check both parties' credit files before any joint application
3. Understand that joint accounts mean joint liability — full stop
4. Consider whether a guarantor arrangement is truly necessary or whether alternatives exist

During financial arrangements:

1. Monitor your own credit file quarterly even when things are going well
2. Know what joint accounts and guarantor arrangements are currently active on your file
3. Keep documentation of any hardship notifications or disputes with joint lenders

During separation:

1. Act immediately on joint account restructuring — don't assume informal agreements protect your credit file
2. Formally notify all joint lenders of the separation in writing
3. Get your credit file reviewed professionally before entering any new credit arrangements

Frequently Asked Questions

Does my partner's debt affect my credit score in Australia? Generally no — Australian credit scores are individual, not shared. Your partner's personal debts, defaults, and credit history do not appear on your credit file or affect your score unless you have jointly signed a credit contract together (joint home loan, joint credit card) or you have acted as guarantor on their loan. Simply being married to or living with someone with bad credit has no effect on your score. For more, see our guide on does debt consolidation affect your credit score in australia?.

Does a joint bank account affect credit score in Australia? A standard joint transaction or savings account (bank account) does not affect your credit score — these are not credit products and are not reported to credit bureaus. Only joint credit products (joint home loans, joint credit cards, joint personal loans) create joint liability that appears on both parties' credit files.

What happens to credit score in a divorce in Australia? Your credit score itself is not directly affected by divorce — however, joint credit accounts and guarantor arrangements created during the marriage remain on both credit files until formally restructured. Missed payments or defaults on these accounts after separation affect both parties' scores equally. Separating joint accounts as quickly as possible (refinancing into sole names or closing) protects your credit file during and after divorce.

Can a guarantor arrangement damage my credit score? Yes — if you're a guarantor on someone else's loan and that person defaults, the lender can enforce the guarantee against you. This creates a debt obligation on your file that, if unpaid, becomes a default. Even before a guarantee is called upon, the commitment may appear as a contingent liability on your file affecting lender assessments of your total credit exposure.

If someone fraudulently used my details to get credit, does it affect my score? Yes — identity fraud creates fraudulent enquiries and accounts on your credit file in your name. These directly damage your score and may result in default listings for debts you never incurred. Fraudulent entries can be disputed and removed under the Privacy Act 1988. If you find accounts on your file you didn't open, report this to the police and to the relevant credit bureau immediately.

Can I remove a joint account entry from my credit file? If you are a legitimate joint account holder, the account history on your file is a factual record and cannot be removed simply because you want it gone. However, if entries on the joint account contain errors (incorrect late payment dates, incorrect amounts), or if notifications about hardship arrangements were ignored by the lender, dispute grounds may exist. Australian Credit Solutions assesses joint account credit file issues as part of free initial assessments.

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Australian Credit Solutions Pty Ltd holds Australian Credit Licence ACL 532003. Credit repair services are subject to individual assessment. Results may vary. This article provides general information only and does not constitute legal or financial advice.

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