Marriage and Credit Scores

Getting married is a wonderful moment in life, but what happens to your credit reports and scores when you get married? There are all kinds of common misconceptions about merging reports and falling credit scores. Find out how being married can affects your credit.

Do married couples share their credit scores?
No. Credit scores are individual, and each one of you has its own file and score. Shared accounts may appear on both of your individual credit reports, and may have a positive (or negative) effect on your scores, but again, each file is separate from the other.

What happens with joint accounts?
Marriage opens up financial opportunities because you can pool your money. If you apply for credit jointly such as a car loan, credit card account or a mortgage, these joint accounts will show up on each of your individual credit reports.

Married couples can also put their spouses as authorized users, or co-sign for each other (assuming each one passes the required co-signer criteria).

Combining your finances in any of these ways can be a great way to get the best deal on a major purchase. Be careful though, because any negative reporting associated with these accounts could mean double damage for both of your credit reports and scores.

Another thing to keep in mind is that debt associated with joint account appears on both credit report, and is factored in both of your debt-to-income ratio. This may sometimes reduce your ability to apply for new credit.

What if a spouse has bad credit?
Very often, you may have good credit while your spouse has bad credit (or vise-versa). This can create problems when applying for joint credit, especially a mortgage. Each mortgage company has its own practices, but it’s fair to assume that in the best case your mean score will be considered for the application. Some companies, though, will use the LOWER score to process your application.

In such cases you should consider applying for credit separately (only the person with the good credit).

You can help your spouse re-establish good credit by adding him/her as an authorized user to your credit card account. This is called Credit Piggybacking, it’s completely legal and recognized by Fico.

What happens if we separate?
Divorce can be very problematic with respect to credit reports and scores, especially with joint accounts.

When hard emotions are involved, reasoning takes second place. It’s not unheard of for people to ruin their spouse’s credit (including their own) just for revenge.

If you’re separating or getting divorced, be sure to contact your creditors. They will record your new contact information and help separate your financial transactions. You may also want to inform the credit bureaus, in order to protect the integrity of your credit report.

If your ex-spouse is disgruntled, secure your mail so he/she cannot steal items such as approved credit card applications.

Most importantly – speak with an attorney about closing joint accounts and paying off balances. Remember that even when you divorce, you are still help accountable for all joint accounts.
For more information, see Divorce And Credit