Financial Counseling Certification Program (FiCEP) Practice Exam

True or False: Late payments on jointly held debts will only impact the credit report of the individual who made the late payment.

1. True

2. False

3. Depends on the creditor

4. Only affects credit scores over time

The correct answer is: False

The statement that late payments on jointly held debts will only impact the credit report of the individual who made the late payment is false. When debts are jointly held, both parties are equally responsible for the payment. Therefore, a late payment on a joint account can adversely affect the credit scores of both individuals involved. For instance, when a payment is missed or made late, the credit reporting agencies record this negative information in the credit reports of both borrowers. This can result in a decrease in their credit scores, making it more challenging for either party to secure new credit or favorable interest rates in the future. The impact on both parties' credit reports reinforces the importance of communication and responsibility when handling shared financial obligations. Each individual should be vigilant and proactive about making timely payments, as their credit histories are inextricably linked through joint debts.