A joint bank account can be an advantage and a disadvantage when it comes to credit scoring. In some cases, a joint account will help to boost one person's suffering credit, but in other cases, it could drag down one person's otherwise solid credit. There also are differences between joint accounts. Joint bank accounts could mean checking and savings accounts or it could mean joint bank loan accounts. It is important to understand the consequences of each on your credit.
According to Experian, one of the three major U.S. credit reporting agencies, each consumer has a credit score that reflects his or her credit history. Failing to pay debts on time, carrying a large amount of debt and having a high ratio of balance to credit limits are among the factors that can negatively affect a credit score. When looking at a joint credit application, lenders and credit companies may review both scores and come up with a proprietary "blended" score, but, in general, each person's score will remain independent of the other. However, a poor score can influence a joint decision, as can an outstanding score.
Joint Checking and Savings Accounts
Joint checking and savings accounts will not affect credit scores, according to Experian. The assets in these accounts cannot be a factor in rendering a credit decision. These assets are simply factors of a credit application and cannot change an individual's credit score. In addition, none of the information in these accounts, such as deposits and withdrawals, is reported to the credit agencies.
Joint Bank Loan Accounts
Joint bank loan accounts, on the other hand, will reflect the credit scores and performance of both individuals on the account. The underwriting of these accounts and the final terms and conditions offered on lending products to joint customers will be based on the credit scores of the two individuals on the application. In addition, a "blended" score may be used to help quantify the total creditworthiness of the two borrowers combined on the application.
Joint Bank Mortgage Accounts
Similar to joint loan accounts, a joint mortgage from a bank will similarly reflect the credit scores of both individuals. However, other factors such as a joint checking and savings account also may play a role in a creditor's decision to loan you money. The assets you both have could play a role in the decision, but your credit scores, which are not based on assets, will play a much larger role.
Based in Eugene, Ore., Duncan Jenkins has been writing finance-related articles since 2008. His specialties include personal finance advice, mortgage/equity loans and credit management. Jenkins obtained his bachelor's degree in English from Clark University.