Beverly Harzog is a credit card expert and consumer credit analyst for American News and World Report.
Getting married is a big decision, not just emotionally but financially. What are people wrong about how marriage affects their credit? A common misconception is that you have a joint credit report. You always have your own credit history, and so do your credit scores. Another misconception is that you have to apply for credit together. You can apply for things like a mortgage or a credit card together, but each partner must have their own established credit. If you have to build your own credit because, say, your spouse dies or you divorce, a difficult situation could become even more difficult.
Are there times when it’s a bad idea for a couple to apply for credit together? Let us return to the example of the mortgage. If both spouses have relatively high credit scores, you are more likely to be approved at the best rates because lenders don’t see you as a risk. However, let’s say one spouse has a credit score 100 points higher than the other spouse. In a situation like this, the spouse with the best credit score would have to apply for the mortgage, assuming they have sufficient income to apply on their own. Otherwise, you might not get the best interest rate on the loan, or you might not get approved at all.
People mistakenly assume that lenders will only look at the best score. They will take your two scores into account. If one of the spouses has a low score, a lender will consider you a higher risk due to the possibility that that spouse will end up being responsible for the payments. The same goes for a common credit card application.
But what if one of the spouses tries to restore or improve their creditworthiness? First of all, you need to understand why this spouse does not have a good credit rating. Is it because they just never tried to create credit? Or is their score low because they missed payments on their bills? From there, you can decide if you want to help this spouse improve their credit by adding them as an authorized user on one of your accounts. If you add your spouse as an authorized user, ensure that the credit card issuer reports to the credit bureaus your spouse’s use of the card linked to your account. Not all of them do. Then you need to understand that you are responsible if your spouse accumulates a balance and does not pay it.
How can a couple, married or not, maintain good credit habits and avoid credit conflicts? Credit is teamwork. Couples should discuss each other’s amount of debt, including student loans, how they can work together to improve their credit, and what they need to do to reach that goal.
You should each regularly review your credit reports. You can still get them for free every week from the credit bureaus until April, but even after that you are entitled to a free credit report from every major bureau once every 12 months. So, every four months, you both need to get a credit report from one of the bureaus and review it for accuracy and for signs of fraud. And if you notice that something is wrong, be sure to file a dispute with the credit bureaus.
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