How a Mortgage Default Affects Your Credit Score
Money Girl answers a listener question about defaulting on your mortgage and how it will affect your credit score.
Laura Adams, MBA
Linda R. wants to know:
I was unable to get a mortgage due to having poor credit, so my daughter got one for me. I’ve made all the payments–until now, because my income has been cut and I can’t afford it. If I default on the mortgage how will this affect my and my daughter’s credit?
ANSWER: When you sign for a loan or credit account, you are accepting legal responsibility for the debt, no matter who actually makes the payments.
The payment history of a debt is reported to the credit file of the debt owner(s) only.
If you aren’t listed as a borrower on the mortgage, the payment history isn’t reported to your credit file, just to your daughter’s.