Did you know that your credit score can be affected by the people you live with? If you have a bad credit history with someone, it could appear on your credit report. While having a housemate may help you save money on housing by lowering prices in areas where rent is exorbitant, their behaviors have the potential to harm your credit report and credit score, limiting your access to credit in the future.
How can your housemate impact your credit report?
Joint living arrangements with other people can be beneficial for many reasons such as sharing costs and bills. However, your flatmate or housemate can affect your credit report in Australia in several ways:
- Joint accounts: If you open a joint bank account with your flatmate to pay bills, this creates a financial association. If the account goes overdrawn due to your flatmate’s actions, it can negatively impact your credit score.
- Utility bills: If you’re responsible for paying utility bills in your name, missed payments due to your flatmate not contributing can be reported to credit reference agencies, affecting your credit score.
- Lease agreements: Most lease agreements include joint and several liability clauses, meaning you’re responsible for the entire rent payment even if your flatmate doesn’t pay their share. Failure to pay rent can lead to eviction and court judgments, which can harm your credit score.
- Financial associations: Having a joint account or other shared financial products with your flatmate creates a link on your credit report. Future lenders can look at your flatmate’s credit report when you apply for credit, potentially affecting your applications if they have financial problems.
Remember these things
- Credit checks are typically performed on individuals, not on the people you live with in Australia.
- Rent payments are not usually reported to credit bureaus, so they don’t directly affect your credit score.
- Your flatmate cannot access your credit report, as landlords and real estate agents are not permitted to obtain credit reports unless otherwise stated in prior agreements or conditions.
If you stay on a lease with someone or have a housemate, your credit score should not be affected since real-estate agents and landlords are unable to access your credit report unless otherwise stated in prior agreements or conditions. However, if you split utility costs with a housemate who isn’t paying their share, this could put you in hot water.
What is a default on your credit report?
A default is a negative lisiting that goes on your credit report from an overdue account. This is placed on your credit file to tell other companies and creditors that an account was opened and not paid.
Remember, if your payment of $150 or more is overdue by 60 days or longer, it will be recorded on your credit report. This includes payments on your utility accounts such as your energy, phone and internet bills. Make sure your housemate pays their part promptly if you have your name on the utility accounts to avoid a negative listing from a utility bill on your credit score. If you must move out soon, make certain to remove yourself from the account.
If you do receive a default listing on your credit report, it will then remain there for 5 years even after it has been repaid. This can lower your credit score and could impact your ability to access credit in the future.
Can defaults be removed?
If you have received a default on your credit report from an account you had yourself or a joint account or issues with a housemate or flatmate then there are two options for you. The first option is to pay the account, have the default marked as paid but still impact your credit report for 5 years. Alternatively there are credit repair companies that may be able to help get the listing removed.
