A bad credit rating can have a big impact on your plans to get a mortgage.

But when they applied for a home loan, things began to unravel fast after her partner’s financial past came back to haunt them both.

The Sydney woman had no idea her long-term partner actually held a big secret — one that affected their entire financial future.

Her fiance had debts from a gambling habit, one which she had no clue about until they applied for a loan.

“My credit history was fantastic, but his wasn’t at all,” said Amy, whose last name news.com.au has chosen to withhold.

“It completely threw me as I had no idea (about his past).”

Amy said the couple were stuck and could have applied to other banks or financial institutions but were faced with a massive interest rate, something that seemed ridiculous on top of the amount they were looking to borrow.

Amy, who works in sales, said she wished they had undertaken a credit check before applying for the loan.

“It would have saved so much time and energy upfront,” she said.

The couple has since split up.

While her partner’s debt did not affect her own ability to borrow or her credit history, it meant they were unable to apply for any loan together after being “saddled with sexually transmitted debt”.

SEXUALLY TRANSMITTED DEBT

Financial Counselling Australia chief executive officer Fiona Guthrie said “sexually transmitted debt” meant more than just being affected by another person’s credit history. It could be seen as a form of economic abuse, particularly if one partner was left paying off a debt in their own name.

“It can be very serious especially when one person is left holding the baby, so to speak,” she said.

Credit scores could certainly come back to affect a couple if one partner had a bad credit history, or hadn’t even realised they had one, Ms Guthrie said.

“If someone has a bad credit history and applies for a joint loan it’s more of a contagion effect,” she said.

Some couples may not even be aware they have a black mark against their name.Source:Supplied

Ms Guthrie said missing a bill, even by accident, could leave people with a black mark against their names.

“This could have implications for joint loans. A pretty serious black mark means people won’t be able to get a home loan” she said.

“If someone defaulted on a payment or is bankrupt that mark stays for five years.”

However she said even if your partner had a bad debt, it only affected you if you were going for a loan together.

She said if one partner had a bad credit history and a joint loan was essential, they first had to demonstrate they had repaid the debt.

They also had to wait for that debt to clear.

GHOSTS OF CREDIT PAST

Amy is just one of the growing number of Australians concerned about how their partner’s financial past can come back to bite them.

A recent survey by financial comparison site finder.com.au revealed almost one in five people are concerned how their partner’s credit score could negatively affect their borrowing capacity as a couple.

The survey of more than 2000 people, also found 5 per cent remained very worried about their partner’s credit score, and a further 4 per cent were actually stressed over their partner’s credit scores.

Couples can share more than a bed, with debt history having the potential to come back to bite.Source:istock

The research also revealed that more than 80 per cent of Australians had no clue that their partner’s financial past could affect joint financial decisions in the future.

Gen Y remained the most concerned or stressed about their partner’s financial score at 32 per cent.

Finder.com.au spokeswoman and money expert Bessie Hassan said Australians had a right to be concerned about their partner or potential partner’s spending habits and their credit score.

“If you plan on purchasing a house one day and taking on a mortgage, your partner’s creditworthiness will play a big part in getting approval,” she said.

“If you plan on purchasing a property together, it’s both yours and your partner’s credit scores that will be taken into account by potential lenders when considering your application.

“If one of you have a poor score, this can affect your approval limit or even whether you’re approved at all.”

‘DISEASE OF THE DOLLAR SIGN’

Newcastle teacher Jack* knows all too well how his partner’s chequered past can affect his financial future.

His wife’s past debt meant that her credit history is a liability and something that has to be clearly explained to various service providers.

The couple have been married for 10 years and have five adult children between them.

But Jack said he was well aware of his wife’s debt before they got together.

“I love her to death but she does have a disease of the dollar sign,” he said.

“But she has gotten better over the years and is learning to pay back her debt.”

HOW TO IMPROVE YOUR CREDIT SCORE

Mrs Hassan said accessing your credit score can help you understand your financial position so you can make changes before you apply for finance.

There are lots of things you can do to avoid catching sexually transmitted debt.Source:istock

She also said there was hope for those who have had a bad experience with debt in the past and

there were several things you could do to improve your score before you even apply for finance including:

* Check for high-risk listings: “Once you have your credit file on hand, keep an eye out for high-risk listings such as high credit card limits or bad credit listings such as defaults or infringements,” she said.

* Identify areas for improvement: After reviewing your credit file and your credit score, take measures to improve your financial health.

* Don’t go overboard with applications: Making multiple credit applications in a short period of time can negatively affect your credit score

* Regularly review your credit score: Get into a habit of frequently checking your credit score to make sure that all information listed is correct, and to identify how you can improve your financial health.

* Get back to basics. Pay your bills on time, and start saving — your ability to demonstrate ongoing savings will show potential enders that you have discipline.

* Get a credit check before applying for a loan: Mrs Hassan said taking a credit score test beforehand could avoid further financial pain down the line. “Finder.com.au is now offering free credit score checks to all Australians,” she said. “The service is easy to use, safe, and doesn’t affect your credit rating.”

* Names have been changed for privacy reasons