Does opting for joint loan affect credit score of both applicants?

Joint loan, a saviour in case you wish your higher ticket size loan amount application to be approved and disbursed by the bank, should be opted for following analysis of credit score of both the intended borrowers. This is required as applying for a joint loan with a co-applicant whose credit score is low could result in the disqualification. Also know about Tax Benefits of Joint Loan application. Though banks do the usual KYC procedure and check applicants credit history before qualifying your loan application for sanctioning the loan amount, it makes real good sense to do some home work on your part.

Banks considering the backing of the income stream, held collateral security as well as higher credit score of applicants of the joint loan qualify the loan application. So, opt of joint loan with either your spouse, parent, friend or some relative scores over higher loan amount application made singly. However, financial institutions held all the loan applicants responsible for the loan repayment.

Though, as per the loan terms, responsibility of loan repayment generally lies with the primary borrower. Nevertheless, in a scenario, when the primary borrower of the loan fails to pay-off the liability in due time or in a grave scenario defaults on EMI payments, responsibility of loan repayment transfers on to you. So, a weak loan-repayment regime on the part of the borrowers reflects on the credit score of both the parties. And banks and other financial institutions do not give weightage to the loan repayment terms settled by the borrowers in case of unfortunate event of a divorce of the couple who were the loan applicants. And in fact, creditors run after both the applicants to settle the debt.

So, in order to ensure maintenance of good credit score for both the applicants, it is undoubtedly important to religiously pay-off the debt in a timely manner without any delay. Also, in cases when you or the bank revises the terms and conditions of the loan, ensure that you know and strictly pay-off the revised debt liability.

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