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
2-minute read

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.

Therefore defaulting on a loan in your daughter's name only puts her credit in jeopardy. There's no way to say exactly how much her credit score would drop, but it could go down in excess of 100 points.

Discuss the situation with her as soon as possible, if you haven't already. If you default on the loan her credit will suffer and the lender may take legal action against her.

I recommend that she seek the advice of an attorney to fully understand the consequences of a default in the state(s) where you live and the best financial and legal options for both of you.


To learn more about credit, download the Credit Score Survival Kit. This multimedia kit includes a video where I show you step by step how to get your free credit report. Plus, I tell you about my favorite place to get your credit score free, with no strings attached. Check it out:

Credit Score Survival Kit

********** Laura Adams is the award-winning author of Money Girl’s Smart Moves to Grow Rich. Get the paperback or ebook on Amazon.com! Be sure to connect with her on Facebook, Twitter, and Google+ Click here to Download 2 Free book chapters!

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About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.