The financial association concept
When two people have joint credit (mortgage, joint account with overdraft, joint credit card), credit reference agencies treat them as "financially associated". Each person's credit file references the other.
When a lender scores you, they may take into account defaults or negative markers on someone you are financially associated with, particularly for larger credit applications like mortgages.
Sole loans do not directly affect the other person
A sole personal loan defaulting adds a default only to the individual borrower's credit file. The other person's file does not get a direct entry from that default.
However, if the sole borrower is refused a mortgage or credit as a result, and the couple is planning a joint application, the joint application will also be affected.
Breaking financial association
You can apply to credit reference agencies to remove a financial association if the shared credit product has ended and the accounts are settled.
Common scenarios: separation from a partner, closing a joint account, ending a joint tenancy. Once the shared product is closed, the association can be broken.
Joint loans vs individual loans in relationships
Couples sometimes deliberately keep loans in one name to protect the other's credit. This is legitimate but has limits — the financially-associated principle still applies for joint products.
Full protection of both credit files requires having no joint credit at all — which is often impractical.