Students heading to university this month are being warned not to set up joint financial products with their housemates as this could negatively affect their access to credit in the future.
Research from credit rating company Clearscore has found that more than one in three (34%) graduates risks being turned down for financial products, such as mortgages and credit cards, because they are financially tied to old university housemates’ credit scores.
This comes as a result of setting up joint financial products such as joint bank accounts, to pay for bills and other expenses. This financial “link” remains on a person’s credit file for six years, according to the company.
Three quarters of graduates (76%) are unaware that even if they have a good rating, they can be denied access to financial products if an old housemate has made bad financial decisions that led to a bad rating.
Chief executive and founder of Clearscore, Justin Basini, comments: “Graduates coming out of university are unaware that simple financial decisions, such as having a joint current account with their housemates means they run the risk of credit rejection. Even if your own credit report and score are in great shape, a mate who doesn’t manage their money could damage your chances of successfully gaining credit.
“I’d urge everyone to check their credit report to look out for housemates they may still be connected to. If you do have a financial connection that is still lingering, you need to contact the credit bureaus directly to cut the tie.”