Marriage Affects Your Credit: True or False?

You’re married or about to get married. Great news! However, how does marriage affect your credit? Some of you will be concerned, but have no fear! All the information you need (and more) is provided in this article. Just continue reading!

[Read: Getting Financially Organised]

Mature couple talking to financial planner

How Marriage Affects Your Credit: Myths Busted!

Contrary to popular opinion, not much does change in terms of credit when you get married. Let’s get these myths busted before they cause damage.

  • Your credit files don’t merge when you marry. Your credit history is yours only. The only part that may change on your credit report is your surname (if you decide to change it)
  • Your credit score is unaffected by marriage. Your score is not affected by your spouse’s score. ‘Joint credit scores’ don’t exist. Your credit score depends on:
    • Payment history
    • Debt utilisation ratio
    • Age of your accounts

Not:

  • Race
  • National origin
  • Religion
  • Political beliefs
  • Sexual orientation
  • Place of residence
  • Occupation
  • Employment
  • Salary
  • Assets
  • Age
  • Family
  • Spouse’s credit score
  • Changing your last name does not erase your previous credit history. Your credit history is always yours, whether your name changes or not
  • Marriage does not make you responsible for your partner’s defaults. You are individually responsible for your own debts by law (unless you live in one of the American community property states, like Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin)
  • Marriage does not unlock the door to your spouse’s accounts. Marriage does not make you an authorised user or a joint owner of your spouse’s account

Marrying for money seems like a much less viable option, doesn’t it?

How Marriage Affects Your Credit: The Truth

Of course, overall household finances are affected by marriage. For example, if you’re both great savers, you’ll reach your financial goals quicker than if one or both of you are spenders. It is possible to help each other to get great credit and therefore better future opportunities. Examples of how marriage affects your credit are as follows:

  • Applying together-for example, applying for mortgages. In this case, both credit scores are important. If you or your spouse has poor credit, this can result in rejection or poor conditions. You may be approved for a lower loan than desired or unfavourable terms
  • The one who earns most (or all) of the money takes the credit. Very often in marriages, one-person works and the other stays at home (to look after the house and kids for example). This means that the nonworking partner has no possibility of building or maintaining a good credit score. The best way to avoid this is for both of you to be names on a well-handled account

The obvious thing here is to make sure that you are responsible for a healthy credit score, before getting married.

The Relationship Falls Apart: What Now?

You’ve signed a contract together for a wedding loan, or a flat, but unfortunately your relationship turned sour. What then? Unfortunately, you’re both still legally obliged to pay off the debt and your relationship status has no effect on that. If you decide not to honour the contract, both credit scores will suffer. This is how marriage affects your credit negatively.

Helping Your Partner to Build Credit

Set a great example to your spouse by showing them how to build great credit. Speaking briefly about bills, spending, budgeting and debt once a week can help. Help each other to make sure your marriage affects your credit positively. You could even sign up for credit counselling together, so you can both learn how to make a healthy credit score. Below are a couple of tips to help you in getting started:

  • Don’t co-sign. Doing this means that you’re taking full responsibility for debt if your spouse is unable to pay. Rather than taking full responsibility, educate them. The turnaround will be much quicker and they won’t be able to pass off the responsibility to anyone else
  • Add them to one of your accounts. If handled properly, this can really boost your spouse’s credit score. It may be better to help them to research and maintain an account on their own
  • If you’re the partner with the lower credit score, take the help and use the opportunity wisely to improve

Man-and-woman-facing-camera-2

Help each other to create and maintain good credit scores, you never know when they may be useful in the future!

[Read: Keys to a Good Credit Score: Scoring Big With Good Credit]

In essence, marriage affects your credit very little. However, it is very important to make sure that you both have good credit before applying for a loan together. The key to happiness it to make sure you are both being fair to each other, especially where money is concerned. Maybe you want to buy a car or a new home together. A good credit score will increase your chances, so help each other to achieve and maintain a healthy credit score (or marry someone with a good credit rating)!