Outlook Money
An impact on credit scores during old age can cause severe financial consequences, such as a rise in EMIs and a drop in borrowing capacity. Usually, the credit score is impacted negatively due to financial indiscipline.
In some cases, the death of the spouse could lead to a negative impact on the credit score of the other partner. Therefore one should know and understand certain scenarios.
If a personal loan is co-borrowed and one of the spouses dies, then the outstanding loan amount has to be paid by the surviving borrower. In such cases, the EMI repayment obligation of the surviving spouse increases, thus it may impact their credit score to some extent.
Upon the death of one spouse, if the surviving spouse inherits the loaned asset, they assume responsibility for repaying the outstanding loan balance. This inherited loan will affect the credit score of the surviving spouse just like any other personal loan.
Usually, retired people plan loan repayment by using their accumulated retirement corpus. After the death of one of the spouses, the surviving spouse can use the allocated corpus to repay the outstanding loan amount to avoid an impact on their credit score.
Compiled by Syed Muskan