Home Buddies – Home Ownership Coach – Houston, Texas

The Danger of a Joint Account (Video)

Many people mistakenly allow themselves to fall into the trap of having a joint account. Usually this occurs because a couple believes that they can qualify more easily if they apply for a car, home etc. jointly, as opposed to applying separately. Although this may be the case, it is always better to first attempt to apply for a loan in one person’s name because jointly applying also doubles the liability to both of you.

Keep Accounts Separate

It is essential to keep accounts separate in order to protect your credit score. For example, if only you and not your significant other is on the car note and you miss a payment then only one of you will have your credit score affected. This ensures that if you fall on hard times that one of you will still have good credit to make necessary purchases.

When to have Joint Accounts

The only time you should both be on any type of liability is if one of you cannot qualify individually. For example, in buying a home, mortgage companies will require a sufficient amount of income to cover the future mortgage. Many times it will require the household income to cover the mortgage and in such a case they likely would require that both you and your significant other be on the loan.

So don’t fall into the trap of risking too much credit for any loan. Always apply first as an individual. If you cannot qualify, then and only then, should you bring in your significant other’s credit to secure the loan and vice versa.

Cliff Pape
Home Buddies