Individual or Joint account?

[Derrick]

I’m getting married three months from now, and was wondering whats the best credit account type to open? Should me and my would-be wife opt for a joint account, or is it better to keep our separate individual accounts?

[Stacy Wall]

It depends on your specific circumstances

Whether married couples should maintain separate or joint accounts is beyond the scope of this site. It depends on whether both spouses are employed, on how they want to manage their financials and more.

The following section describes the advantages and dis-advantages of every account type, with emphasis on the credit reports and scores aspect:

Individual Accounts
Whether you are married or single, you alone is responsible for the account and for paying off any debts related to it, unless you live in one of the Community Property States.

The account will appear only on your credit report (or both yours and your spouse’s if you live in a community property state), and may appear on any “Authorized User” credit report as well.

Advantages
No one can hurt your credit. If you are responsible – your credit will benefit.

Disadvantages
If you’re only part time employed, have a low-income job or doesn’t work at all, it may be very difficult or even impossible to obtain credit without your spouse’s income.

If you’re applying for a mortgage with your spouse, you probably have no choice other than joint account.

Joint Accounts
Whether you are married separated or even got divorced, both you and your (former) spouse are responsible for the account and for paying off any debts related to it.

The account will appear only on both yours and your spouse’s credit reports, and will affect both of your individual credit scores. The account may also appear on any “Authorized User” credit report as well.

By law, either spouse has the right to close a joint account (after the debts have been paid off).

Advantages
Because both your income & financial assets combined with your spouses’ are considered for a joint account – it may be easier to apply for credit.

Disadvantages
Because both your existing debts & credit standing combined with that of your spouse’s are considered for a joint account, it may be more difficult to apply for credit, especially if one spouse has high debt or bad credit.
In the case that one spouse is not responsible – he/she can damage his/her spouse credit. Furthermore: should you separate and don’t close the joint accounts – former spouses who run up high bills and don’t pay them can very easily hurt their ex partner’s credit.

Account “users”
If you own an individual or a joint account, you can authorize another person to use it. The account may appear on the credit report of each authorized user, as well as on yours.

Often, people name their spouse, kids or parents as authorized users, so they can benefit from a good credit history they otherwise couldn’t. It’s called Credit Piggybacking, and it’s fairly common, especially with parents who want to give their teenagers a credit jump start.

Advantages
An excellent way to jump start someone’s credit, especially if he/she has no steady income.

Disadvantages
While authorized users can use the account, only the account owner(s) are liable for paying the debt. An irresponsible authorized user can get you into debt and trouble.

Very much like an authorized user can benefit from a good credit history, if the account owner is not responsible or runs into financial troubles – an authorized user’s credit will get hurt.

My advice is to enjoy the credit piggybacking as long as you need it, and then ask the account owner or the creditor to remove you as authorized user.

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