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Three Credit Tips to Help You Achieve Marital Harmony

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You’ve formally taken the plunge and entered the world of marital bliss. You’ve committed to each other “in sickness and in health” and “for richer or for poorer,” but one question is yet to be answered: what should you do about your credit?

I don’t pretend to have all the answers on how to best manage your credit as a couple, but I can give you some tips based on what has worked for my wife and me during our 15-year marriage.

Stay a Credit Bachelor(ette)

Decades ago it was commonplace for the man to work outside the home and the woman to raise children in the home. And if that’s your choice now, then more power to you. But my guess is that in today’s world more families have two working spouses. As such, you likely have dual incomes. This makes the need to co-sign or apply for credit jointly completely unnecessary.

As a family unit you’ll likely apply for three different types of credit: credit cards, car loans and a mortgage. Let’s address them one at a time.

You do not need two incomes to qualify for a credit card. So, applying for a credit card jointly is not a requirement. In fact, you can accomplish the same “plastic” efficiency by opening a card and adding your spouse as an authorized user, which gives you the same usage permissions and same credit building benefits, but none of the liability.

You don’t need to apply jointly for an auto loan. Qualifying for an auto loan or lease is not that difficult if you’ve got good credit and even a modest income. The exception to this rule is if your spouse has a very “thin” or limited credit report. In that case, adding him or her to the loan is not a bad way to help build their credit reports.

You will probably need to apply jointly for a mortgage loan. Unless you’re buying something very affordable or one of you makes a hefty income, you’ll both need to be on the loan documents. This isn’t that big of a deal, as installment debt isn’t nearly as damaging as revolving (credit card) debt. And, as with the auto loan scenario, having a mortgage on your credit reports isn’t a bad thing for your credit scores.

This theory of credit independence seems to polarize my readers. I get very supportive or very critical comments to my “couples and credit “ suggestions. I understand the counterarguments, but with the divorce rate so high, it’s easier to divide credit obligations when there’s only one name on the account. And while nobody goes into a marriage expecting a divorce, reality is reality.

Be Honest About Your Ex’s

Not your old boyfriends and girlfriends. I’m referring to your ex-credit obligations that might still be haunting you. Nothing is more infuriating than learning about defaulted credit obligations that pre-date your marriage.

I’ve got three very good friends who are now divorced and each of them attributes their divorce partially to old spousal debts that were never disclosed prior to getting married. One was a $90,000 student loan and the two others were massive amounts of credit card debt.  The “I had no idea I was marrying into this” conversation isn’t one you want to have, ever. It can’t end well and suggests that you can’t trust your spouse on credit and debt related issues. This sort of financial infidelity is marital cancer, which can only be cured by coming clean about your debt-related skeletons sooner rather than later. And by sooner, I mean before you get married.

Don’t Hide Credit Purchases

My wife and I have a policy about credit card purchases. If the purchase isn’t of the “normal” (groceries, gas, etc.) variety and it exceeds $100, then we will tell the other BEFORE making the purchase. We’re not asking for permission or an endorsement, but we are extending the courtesy of letting the other one know. And 99% of the time the other responds with “sounds good.” While it seems like a formality at this point, I know we both appreciate the “heads up.”

Put yourself in this situation and ask yourself: how would my spouse respond?  You go to the mall and buy $1,500 in suits at Ann Taylor for work, which is a completely reasonable purchase if your job requires business attire. Before you leave the mall, the credit card issuer calls your home and speaks with your spouse and asks him if he was aware that someone just spent $1,500 at Ann Taylor on the account. The answer is clearly “No, but I think I know who did and it’s fine.” Now imagine if you didn’t let your spouse know that you were making the purchase. How would he respond? Having the discussion beforehand makes this scenario, which actually happened to me, a great story to tell friends rather than the beginning of an argument. Which do you prefer?

“Hey, can I see your suits?  I bet they look great on you.”

Or…

“I just got a call from Discover. Did you really just drop 1,500 freaking dollars at Ann Taylor?”

John Ulzheimer is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry. He is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.<> Follow him on Twitter here.

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