When Credit Meets Marriage

When two people decide to get married, their lives become forever intertwined, for better or worse. For most people, that’s a good thing and exactly what the couple wants, but bad credit could be there to rain on their parade. When couple’s get married and join finances, they all but take on each other’s credit as well. Which means that excellent credit score you’ve been building your entire life could take a turn for the worse if your spouse has been less than responsible with their own credit. Although this may not be a major issue for some couples, it tends to become a problem when trying to take out a major loan, such as a mortgage. Due to the poor credit from one spouse, the couple could struggle getting approved for a mortgage with a decent rate and reasonable terms, especially in today’s market. If you and your spouse find yourself in a similar situation, you might want to try one of these methods to clean up your credit scores before marriage.

How to Avoid a Post-Marital Credit Disaster

• Separate Finances: If you’re worried about the effect of your partner’s bad credit score on your squeaky clean score, you may want to consider keeping separate finances in your marriage. As long as both you and spouse agree, you could each keep your own bank accounts, have separate credit cards, and not take out any loans together. Of course, you can still manage your finances together, but keeping each other’s names off of the other’s financial records should prevent your credit scores from being dragged down. The main problem with this is that you’ll only be able to take out a loan or mortgage in one of your names. Obviously, lenders are more likely to give out larger mortgages and better rates to couples who can share the financial burden, rather than individuals, even if they have an excellent credit score.
• Wait and Fix: Perhaps a better solution to your post-marital credit woes is to wait until your partner can repair their credit score. It may take a little time, but everyone is capable of improving a low credit score. By working together, you can help pay off your spouse’s outstanding debts and make sure payments are made on time every month. Your spouse could even consider enrolling in a debt consolidation or credit counseling program to help speed up the process. With a little patience, your spouse can increase their credit score and the two of you can combine finances without hurting anyone’s score. The only problem may be having to wait a year until your partner’s score has improved before combining finances and purchasing a home or taking out a loan in both of your names.