When Sally, a nurse practitioner, decided to marry her long time beau, many of her friends warned her about possible credit problems in the future. Her fiance, Larry, was the owner of a small, two-man auto repair shop. While he made an excellent income, a previous divorce had ruined his credit. Many of their mutual friends felt that Larry’s poor credit would drag down Sally’s previously outstanding relationship with creditors.
Although many persons believe that getting married means that your respective credit histories are merged, it’s not true. Credit records which are established prior to the nuptials are never shared, inherited or combined. Marriage doesn’t affect your credit score if you take your spouse’s last name. Everyone has their own credit report and scores, even if they live in a community property state.
If you have a credit account in your name only, it won’t appear on your spouse’s file. If you have a joint account though, such as a loan, mortgage or credit card, the account history then appears for both parties’ credit reports.
Marrying someone with bad credit won’t affect your credit standing, unless your name is added as a co-owner. While your partner’s bad credit won’t affect your score, it can hurt your ability to get credit as a couple.
1. Credit Reports Merge
This is one of the more common myths. Credit reports are keyed to each parties’ Social Security number. As your SSN doesn’t join with your partner’s, neither will the credit histories.
2. Marriage Will Harm Credit Scores
Getting too far in debt over the cost of the wedding and honeymoon may hurt your credit, but the mere ceremony of getting married won’t. Nothing automatically changes on your credit report when you say “I Do.”
3. Change My Last Name and Erase Credit History
If your name is changed following marriage, you will notice updates to your credit reports. Besides your old name, your new name will be listed as an alias. You don’t get to start all over with a new credit history — under a new name.
4. My Spouse’s Credit Will Hurt My Credit Score
This is a frequent concern for couples about to get married. Your spouse’s credit history doesn’t have an impact on your history.
5. Become a Joint User — Automatically
Marriage alone will not automatically make you an authorized user — or co-signer — on your partner’s accounts. Your partner will need to contact the creditors with the request. Being added as an authorized user will not affect your credit score either. If you are added as a co-signer on a loan account, then it is is normally considered a new loan and a new application for refinancing will possibly need to be completed.
6. When Your Spouse’s Credit Affects Yours
If you and your partner apply for a credit card or loan jointly, then both credit scores will be an investigation of the application approval process. If one, or both, of you have bad credit, there’s a good chance the application will not be approved. If the application is approved, higher interest rates and fees may happen. To work around this, have the partner with the higher credit score apply separately.
Even with joint accounts, or accounts where one partner is an authorized user, the history of the account is reported on both reports — even if only one uses the account. On joint accounts, both parties are responsible for making the payments. If the account becomes delinquent, the lender may attempt to collect from both spouses. With authorized user accounts, the primary account holder is legally responsible for payment.
Marriage can be complicated as it is. To minimize the financial risk and maximize credit, be sure to check with a financial advisor whom you both trust.