A joint loan, a separation and a damaged credit score: Her story is a warning

Published 13 July 2026 · india

"I had done everything right. So why was the bank treating me like a risky borrower?" That question still haunts a friend of mine, a

"I had done everything right. So why was the bank treating me like a risky borrower?" That question still haunts a friend of mine, a university professor who wishes to remain anonymous. For years, she had been the kind of borrower banks love. Every credit card bill was paid on time. Every loan repayment was made without fail. She believed, like most of us do, that a good credit score was simply a reflection of personal financial discipline. Read Full Story Then came a rude shock. After separating from her husband, she decided to move on with life and applied for a personal loan. With a steady income and an impeccable repayment record, she expected the approval process to be routine. It wasn't. Banks either rejected her application or offered her a loan amount far below what she was eligible for. Confused, she dug deeper. That's when she discovered that her former husband had defaulted on multiple EMIs of the home loan they had once taken jointly. Those missed payments on the joint loan had quietly affected her credit report, dragging down her credit score as well. She had never missed an EMI or delayed a credit card payment herself. Yet her creditworthiness had taken a hit because of someone else's financial behaviour. After months of discussions, paperwork and persuasion, she eventually secured a loan, but for a much smaller amount than she had originally sought, despite earning well enough to qualify for more. Her experience reveals one of the least understood truths about borrowing: your credit score isn't always shaped only by your own financial discipline. Sometimes, it's shaped by someone else's decisions too. YOUR SIGNATURE CARRIES MORE WEIGHT THAN YOU THINK Many people believe that a credit score is influenced only by loans they personally borrow and repay.

Not quite. According to Jyoti Prakash Gadia, Managing Director, Resurgent India Limited, becoming a co-borrower or guarantor legally ties your financial reputation to another person's repayment behaviour. "It is often thought that an individual's credit score depends solely on one's loans, credit card usage and repayment behaviour. But that is not entirely true. If an individual acts as a co-borrower or guarantor to someone else's loan, even those loans may affect the individual's credit profile. Any default recorded against an individual can impact his or her future borrowing capacity." In other words, your spotless repayment history may not be enough if you're legally connected to someone else's loan. HELPING SOMEONE CAN TURN INTO A FINANCIAL LIABILITY Few people think twice before signing loan documents for a loved one. Parents become co-applicants on education loans. Couples jointly buy homes. Siblings stand guarantee for business loans. Friends step in during difficult times. The intention is usually to help. The legal consequences, however, can last much longer than the circumstances that prompted the decision. Gadia says many borrowers underestimate the legal responsibility that comes with signing a loan agreement. "By signing a loan application as a co-borrower, joint borrower or guarantor, one is not merely helping the borrower emotionally. The person signing accepts financial responsibility. If the principal borrower delays EMI payments or defaults, the credit history of everyone responsible for the loan is likely to be affected." Banks don't evaluate relationships. They evaluate legal liability. KNOW THE DIFFERENCE BEFORE YOU SIGN Not every shared borrowing arrangement carries the same responsibility. A co-borrower jointly applies for the loan and shares repayment responsibility. A joint borrower generally shares both ownership of the asset and repayment liability. A guarantor doesn't usually pay EMIs initially but becomes legally liable if the borrower defaults. An authorised credit card user, on the other hand, can use the card but isn't legally responsible for repayment.