As much as possible, avoid obtaining Joint Credit with your spouse

Ken Ntiamoa |

Generally, credit is granted based on income and credit rating. Many a time, for a family, income from both sides is needed to be able to qualify to purchase big ticket items such as a home, a boat, cottage and the like.

For ordinary loans such as credit cards, lines of credit, car loans and personal loans, however, it is a good idea to resist co-signing for a spouse. This is because, if the spouse defaults in the payment of the debt, the liability not only falls on you, but it may destroy your credit to the extent that you may lose your credit facilities with your bank.

It may even lead to a family feud and even divorce if not handled properly. It is always a good idea to keep the credit rating of one member of the family unit in good standing so the family can be bailed out in times of crisis rather than destroying the credit of both the husband and wife all at the same time.

No one could exactly predict what would the future holds in terms employment, health and finances. If a person is married, it would be a smart move for him/her to purchase items in his/her name only In the event of default-payment for whatever reason only one of the spouses would be adversely affected like garnishment of wages and bank accounts, seizure of assets and bad credit rating.

A good example was husband and wife both with good income and good credit rating. They jointly purchased a brand new car to replace their old car. The car was registered under the name of the husband, but on the promissory note both were co-makers. When they encountered financial problem the car was seized by the creditor and sold it in a public auction. As a result, there was a deficiency in the amount of $3,500.00. Collection agent was hounding both husband and wife and their credit rating went down the drain.

Had the husband only purchased the car by himself, he would still get approval for the car loan because he had a good income and good credit rating at the time of purchase. The wife should have been spared by the harassment of collection agent and from ruining her credit rating.

If you need further information about mortgage or debt problems, contact

Ken Ntiamoa, MBA

BIA Insolvency Counsellor

Mortgage Broker

(416-398-1877 ext 201)

www.lifelinefinancial.ca

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