Impact of Your Family Situation on Your Loan

Financial problems in your partners' past

What happens if you are in a relationship, want to take out a loan, but your partner currently or previously had financial problems?

You are in a relationship, want to apply for a loan, and are asking yourself the following questions:

• Is there a difference if I am married, separated, or cohabiting?
• Are my partner's data considered and will they be informed of my request?
• Do I have to provide my partner's information when applying for a loan?

The Consumer Credit Act imposes certain requirements regarding the expenses to be included in the budget calculation for a loan. A specific point is the consideration of your personal situation, particularly your marital status and close family: even if you want to take out a loan as an individual, these personal circumstances influence the budget calculation in accordance with the Consumer Credit Act, as well as the assessment of your creditworthiness by law.

Married or registered partnership

Theoretically, the partner's data is not required if the applicant's budget criteria are met. The budget calculation will determine the loan amount. This would initially mean that the partner's situation would not be taken into account.

Why then is the partner's information requested when filling out the loan application form?

Banks have different approaches depending on whether you are married, in a civil partnership, or cohabiting, and this can impact the loan decision.

If the applicant's creditworthiness meets the budget calculation criteria and there are no entries in the ZEK / IKO / CRIF, the partner's data is theoretically not essential. However, this was previously the case. Nowadays, banks systematically check the partner's situation.

If you are divorced or separated, you are considered single.

Partner with a risky situation

If the partner is subject to debt collection and/or certificates of loss or has negative entries in the ZEK / IKO / CRIF, the bank reserves the right to refuse the application, even if the applicant's financial situation is good.

Specifically, some banks require the partner's contact details to check their creditworthiness. If the bank discovers that the partner has debt collection and/or certificates of loss, it can refuse to grant the loan despite the applicant's good situation.

Partner with a stable situation

On the other hand, if the partner's financial situation is stable, it can increase the chances of loan approval with a lower interest rate due to better scoring. Additionally, the maximum loan limit could increase.

Providing the partner's information is not mandatory but strongly recommended. The partner's income and financial situation are considered in the budget calculation. If the available portion is larger, the bank assumes that the applicant will have fewer problems repaying the debt. This results in a better scoring! In summary: If the partner earns income and their financial situation is stable, the applicant has three advantages in including this in the budget calculation and providing the bank with this information during the loan application:

• Higher chances of receiving a positive response
• Possibility to increase the loan amount
• Better scoring and thus better interest rate conditions

Good to know: The partner will not be involved in the loan agreement, but their data will be considered.

In case of legal separation

Separated individuals are considered divorced or separated by banks, provided this is officially confirmed by a divorce or separation decree. Otherwise, separated individuals are considered married but living alone.

In this case, the ex-partner's information does not need to be provided.

Discretion Regarding the Partner

The partner's information is only required to give the bank a comprehensive overview of the couple's situation. The partner will not be contacted or involved in the loan application in any way.

Cohabitation: treated equally

Rent costs are taken into account, but not the partner's income.

Nowadays, banks increasingly seek to obtain as much information as possible about the couple's overall situation. In 2021, banks no longer systematically require the partner's data, whether for married couples or those in cohabitation. Each bank applies its own calculation rules, which vary.

Cohabitants are generally considered single since this status is not legally recognized. However, banks have adapted their budget calculations, especially regarding shared rent or when there are children from the cohabitation.

If the partner's insolvency leads to a categorical refusal, even if the applicant's situation is stable and meets all budget criteria, a positive partner situation significantly increases the chances of obtaining the desired loan amount and better interest rates. Therefore, for budget reasons, it is strongly recommended to provide the partner's information when it has a positive impact.

The partner is not involved in the subscribed loan.

CC Crédits Conseils SA analyzes each couple's situation individually, identifies strengths and weaknesses, advises you personally on the best strategy to avoid pitfalls and take advantage of your file's benefits, and objectively directs you to the bank that will respond positively to your profile under the best rate conditions.

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Calculation example

Loan of CHF 20'000. An effective annual interest rate between 4.9% and 10.95% and a term of 48 months generate total interest between CHF 2'018.10 and CHF 4'549.60. Term: 6-120 months; Maximum annual interest rate (including all credit charges) 10.95%. The granting of a loan is prohibited if it leads to the over-indebtedness of the consumer.(Art. 3 LCD)