You’re probably aware that your credit score is an assessment of the risk in making a loan to you. This score is based on your ability to repay debt. But what happens when you marry someone with bad credit or whose credit begins to fall after marriage? How your spouse’s bad credit can affect you depends on the types of loans that you and your spouse take out after the marriage.
Credit Before Marriage
According to online polls, financial health is a major factor when choosing to court someone. Almost half of the people polled said that a person’s credit score would affect their decision to date them. And why not, you’re essentially combining your financial life with someone. While money and finances can be a touchy subject, it’s advisable to have a good idea of what you are getting into, financially speaking, before making the decision to tie the knot. If you’ve fallen in love with someone with a less than stellar credit history, however, have no fear as there are ways to get around this.
Credit After Marriage
Because your credit score is intently tied to your social security number, getting married won’t actually affect your score. Additionally, if you change your last name, this gets amended on your credit reports preventing the need to “start your credit from scratch”. So there you have it, marrying someone with bad credit won’t hurt yours, however, if you own a joint account together and they miss payments, then this could, in fact, bring your credit score down as well.
Downsides of Low Credit Spouses
So we’ve established that marrying someone with bad credit won’t hurt yours, so how could you be affected? Well, when you marry, you are able to co-sign for new loans. Therefore, by marrying someone with a lower credit score you may be limiting your ability to get funding for things like a new car or home if their score brings your combined credit score down. Not only are you capping your total loan amount, but you could end up paying more for things like PMI or higher interest rates.
Keep Separate Accounts
While maintaining a strong credit score can open up numerous doors, mistakes in building and maintaining credit are inevitable. In order to prevent a spouse’s bad credit or irresponsibility when paying their debts, it’s never a bad idea to avoid joint agreements when possible, as well as, limit authorized user on your checking and credit card accounts and maintain separate checking accounts.