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How Does Marriage Affect Credit?

You’ve heard about it in television ads and hushed chatter leading up to your nuptials. “I hope he has a good credit score,” your friends say in ominous tones. All the talk about what marriage is going to do to your credit score won’t necessarily have you rethinking your walk down the aisle, but it will have you wondering what’s going to happen after you’re both wearing rings. Quit wondering!  We’ve put together this helpful guide on how marriage affects credit ratings to separate fact from fiction. First let’s take a look at what doesn’t happen  to your credit score after marriage.

What Doesn’t Happen When You Get Married

When you and your future spouse get married, you will not have a “joint credit report.” Nor will the bride get an all-new credit report if she chooses to change her last name. Your married name will typically be included in your regular credit report as an alias “also known by”, effectively keeping your credit history in one piece and simply adding your new name to your credit information. Sometimes a credit reporting bureau might inadvertently split a new file for the new name, but this is the exception rather than the rule and in any event, it’s a data mistake — one that you should rectify quickly. Blank periods on a credit report are never good for your credit score.

Your credit score will be unaffected by the marriage itself and you will both maintain separate credit files at each of the three major credit reporting bureaus.

Marriage and Credit – How Does Marriage Affect My Credit Score?

Marriage will affect your credit only in as much as you apply for lines of credit together. For example, when you go to apply for a home loan, if the loan is in both of your names then both of you will have your credit history checked by the potential lender. This means that you might be rejected for a loan because of your spouse’s credit. Alternately, you might get charged a higher interest rate for a joint loan than you would for a loan that you applied for on your own if your credit is stellar and your spouse’s is subpar.

Further, if you apply jointly for the mortgage, you will both be liable for the loan and it’s repayment, which will affect your credit score (so make sure you manage the account responsibly for both your sakes.) The same is true for any other credit account where both of you apply for the account jointly. In cases where only one person in a marriage is using the line of credit, both are equally liable and accountable if both applied for the loan. And in cases where a joint account becomes delinquent or enters collection, the lender will attempt to collect the debt from both of you if you both applied for it, regardless of who actually used the credit line in question.

A credit report for a married couple will include the following things for both partners:

  • Accounts where one of you is the cosigner for the other’s line of credit.
  • Accounts that you and your spouse opened together, jointly.
  • Existing accounts that one partner has been added to after the marriage. (If you add your spouse as an authorized user to a credit card, for example.)

Your credit score is unaffected by marriage

Your score is not affected by your spouse’s score. There is no such thing as a joint credit score.

Many factors influence your credit score – primarily payment history, debt utilization ratio, age of accounts, inquiries and credit mix (VantageScore also considers the total dollar amount of your debt). But many other factors have no effect at all. That list includes:

  • Race
  • National origin
  • Religion
  • Political beliefs
  • Sexual orientation
  • Place of residence
  • Occupation
  • Employment status or length of employment
  • Salary
  • Assets
  • Age
  • Family and child support obligations
  • Inquiries not initiated by you
  • Employer inquiries
  • Interest rates on current or past credit products in your file
  • Participation in credit counseling
  • Marital status
  • Spouse’s credit score

What If My Spouse Has Bad Credit?

Determining what to do when one spouse has bad credit can be tricky. On the one hand, your partner’s bad credit might keep you from getting credit, or at least make getting credit more expensive when both of your incomes and credit are needed – when you go to buy a house, for example. On the other hand, your assets and income alone might not be enough to qualify for the loan. Another thing to consider is that if you apply for accounts together jointly, you can help your partner with bad credit increase their credit score by managing the account impeccably by paying the account on time, every time, and keeping the balance as low as possible if it’s a revolving credit card account. With all that said, only you can determine what is the best course of action for you and your spouse.

Authorized Users Versus Account Holder

One last word: There’s a difference between making someone an authorized user of an account and making them an account holder. An authorized user can use an account, but isn’t responsible for any of the associated debt. A joint account holder has the same level of culpability as any other account holder. Some of the pros and cons of each include:

  • Authorized users are much easier to remove from an account than a joint account holder.
  • Adding your spouse to an existing account as either won’t ipso facto affect your credit score. It will only do so if your spouse uses a large line of your credit, bringing the total amount you have borrowed close to your actual credit limit on the account.
  • Adding a spouse with bad credit as an account holder on a healthy credit card account can actually help their credit score if the account has a low balance and an excellent history of on time payments. On the other hand, your credit score can drop if you are added to a delinquent or maxed out credit card  account.

Broken engagement?

Now, a little bit of bad news. If you obtain a credit product together, like financed appliances or furniture, or a loan to cover wedding costs, or even an apartment where you are both named on the lease, and then you call off the wedding, you’re both still legally obligated to honor the financial contract. Your relationship status has no bearing on your responsibility to honor a debt. If you make a decision not to honor the debt because the relationship went sour, your credit will suffer.

How to help your spouse build credit

If you’ve got great credit, you get extra points for being a great catch. The best way to teach your new spouse to manage finances responsibly is by setting a great example and communicating openly about how you do it. Talk about bills, spending, budgeting and debt often. It doesn’t have to be a long heart-to-heart each time, but repetition and practice are keys to mastery, so do a financial debriefing at least once a week. Perhaps your solid credit score came from being financially conservative, but you don’t feel that you have enough credit knowledge to teach someone else how to do it. Sign up for credit counseling as a couple and learn together.

Do not offer to cosign. A cosigner takes full financial responsibility for a debt in case the primary account holder defaults. The cosigner takes on a great deal of risk but gets no benefit. Although you may believe that you can help your partner build good credit by cosigning, credit education will be far more effective and long-lasting. By teaching your spouse good credit habits, you can help him raise his own credit score in as little as a few months. Soon, he’ll qualify on his own for the credit products he needs, and can take on financial obligations without passing responsibility off to you or anyone else.

Adding your spouse as an authorized user on one of your existing accounts can give a boost to his/her poor credit score if the account is handled properly. All users on the account benefit from a history of on-time payments and low debt utilization. (FICO’s latest scoring model does not consider authorized user status, so this benefit will phase itself out as creditors transition to the newer FICO score.)[5] Some creditors do not consider authorized user status when evaluating creditworthiness.

Even better – help your spouse research, obtain and manage accounts on her own.

If you’re the spouse who has room for improvement in the credit department and you’re lucky enough to be engaged or married to someone who is on top of their credit game, use the opportunity wisely to make a life change for the better.

Be Happy, Get Married

On its own, getting married doesn’t do much to affect your credit score one way or the other. However, you will want to keep all of the above in mind going forward after your wedding day. This will help both you and your spouse to reap the maximum benefits of marriage for your credit. If this article has sparked your interest, you may also want to consider what affects credit score with our without matrimony.

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