Credit Sesame discusses the effect of marriage on your credit score and how you can plan for the future.
Does your spouse-to-be have a good credit score? This may not be at the top of your must-know list before marriage, but understanding what marriage does to your credit report is crucial. While it won’t necessarily have you rethinking your walk down the aisle, it will make you wonder what happens after you’re both wearing rings. Wonder no more! This helpful guide on how marriage affects credit ratings separates fact from fiction.
What doesn’t happen to your credit score after marriage
- There is no joint credit report: When you and your partner get married, your credit reports do not merge. Joint credit reports are not a thing. Each of you maintains separate credit files at each of the three major credit reporting bureaus: Experian, Equifax, and TransUnion.
- A name change does not result in a new credit report: If one of you chooses to change your last name, you do not receive an all-new credit report. The married name is typically included in your existing credit report as an alias “also known by.” This keeps the credit history intact, simply adding the new name to the credit information.
- Credit scores do not merge: Your credit score is unaffected by the marriage itself, as there is no such thing as a joint credit score. Your spouse’s credit score remains separate from yours.
How does marriage affect your credit score?
Marriage can affect your credit indirectly when you apply for lines of credit together. For example, if you apply for a home loan in both names, both credit histories are checked by the lender. This means that if one spouse has a poor credit history, it could lead to a loan rejection or a higher interest rate for a joint loan than if the person with a better credit score applied alone.
Additionally, joint applications for credit accounts make both spouses liable for the loan and its repayment, impacting both credit scores. If a joint account becomes delinquent or enters collection, the lender will attempt to collect the debt from both of you, regardless of who actually used the credit line.
Can spouse names appear on your credit report?
If you are married, your credit report (and your spouse’s) may include the following for both partners:
- Accounts where one is the cosigner for the other’s line of credit.
- Jointly opened accounts.
- Existing accounts that one partner has been added to after marriage (e.g. adding a spouse as an authorized user to a credit card).
Factors that do not affect your credit score
Your credit score is influenced by payment history, debt utilization ratio, age of accounts, inquiries, and credit mix. However, many factors have no effect at all, including:
- Marital status
- Spouse’s credit score
- Race
- National origin
- Religion
- Political beliefs
- Sexual orientation
- Place of residence
- Occupation
- Employment status or length of employment
- Salary
- Assets
- Age
- Family and child support obligations
- Inquiries not initiated by you
- Employer inquiries
- Interest rates on current or past credit products in your file
- Participation in credit counseling
What if your spouse has bad credit?
Determining what to do when one spouse has bad credit can be tricky. Your partner’s bad credit might make getting credit more expensive or difficult when both your incomes and credit are needed, such as when buying a house. However, joint applications can help build the credit of the spouse with poor credit if managed responsibly.
Authorized users versus account holders
- Authorized users: An authorized user can use an account but isn’t responsible for the debt. Authorized users are easier to remove from an account.
- Account Holders: A joint account holder has equal responsibility for the debt. Adding a spouse with bad credit as an account holder on a healthy account can help their credit score if the account is managed well.
Broken engagement
If you obtain credit together and then call off the wedding, you are both legally obligated to honor the financial contract. Your relationship status has no bearing on your responsibility to honor a debt, and failing to do so can negatively impact your credit.
Helping your spouse build credit
If you’ve got great credit, you can help your spouse improve their credit by setting a good example and communicating openly about finances. Talk about bills, spending, budgeting, and debt regularly. Credit counseling as a couple can also be beneficial. You may wish to avoid cosigning for your spouse as this poses a significant risk with no benefit to you. Instead, consider adding them as an authorized user on one of your existing accounts to help build their credit.
Get married and be happy
When planning for marriage, it’s natural to focus on the excitement and joy of the upcoming wedding, but it’s also important to be mindful of practical considerations, such as credit scores. Credit management might not be the most romantic aspect of wedding preparations, but it is good to be aware as part of financial planning for the future. Understanding each other’s credit history and discussing financial goals can help build a strong foundation for your future together. By addressing credit scores early on, you can work together to improve your financial health, secure better loan terms, and avoid potential stress down the road. Ultimately, being proactive about your finances can contribute to a more stable and harmonious married life.
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Disclaimer: The article and information provided here are for informational purposes only and are not intended as a substitute for professional advice.
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