Your credit score may be like your first baby; something you’ve taken close care of for a long time, but now someone else is coming into the picture. When you take your relationship to a deeper level and bring someone new into the mix there can be some well-warranted hesitation.
You and your partner’s credit scores are important parts of your lives and could change the trajectory of your relationship. Here’s the breakdown of what role your partner’s credit score could play in your life.
Marriage and Credit Scores
As a married couple, you and your spouse’s credit histories will remain separate. Your credit history is tied to your social security number, and getting married doesn't change that.
Even if you change your last name, it doesn’t matter, all the credit bureaus look for is your social security number. The credit bureaus don’t record marital status, so you don’t have to notify them of the name change or the marriage. Your credit score is one of the things you can continue to independently manage if you keep all of your accounts separate.
What About Joint Accounts After Marriage?
Even if you have a joint account (like a joint credit card or loan), you and your partner’s credit scores will remain separate. Although some rumors say so, there’s no such thing as a joint credit report.
One thing to keep in mind when dealing with credit jointly is that you are both responsible for the account; if it falls out of good standing, the burden falls on you both– even if it’s “not your fault.”
For example, If you and your spouse alternate the responsibility of paying the monthly bill and your partner misses their turn, you’ll both receive the dock of a missed payment on your credit reports.
For what’s at stake, you should always be wholly confident in someone’s ability to manage their personal finances before opening a joint account. The same rule applies when making someone an authorized user on your credit card. An excellent credit score is a serious asset, and you shouldn’t let anyone decrease its value. Opening a joint account with your partner should be a serious step, each party should feel completely confident in their ability to do their part.
When Does Your Partner’s Credit Score Matter?
Although you continue to have your own credit score, getting married can change your credit and financial opportunities moving forward.
As mentioned above, if you apply for loans jointly, open joint accounts, or take on any other debt together, the responsibility and credit impact falls on you both. There are certainly a few questions to ask your significant other over a date night before you start blending your finances.
When you and your partner’s lives begin to intertwine, you should discuss your financial records, even if it’s a bit uncomfortable. You might find that based on your salaries, savings, investments, and debts, you take different approaches to money management. This could help you determine if joint accounts are the right move for you.
A huge step you and your partner may take is buying a home together. In this case, you’ll most likely take out a mortgage loan, and this is where your individual credit scores really come into play.
The Impacts of Marriage on A Mortgage
It’s not all bad news, there are some perks to having a partner beside you as you make more financial moves, especially when buying a home.
The Pros of a Joint Mortgage Application
- If you and your spouse’s credit scores are similar and meet the qualifying threshold, then applying jointly will not affect the approval.
- If both your credit histories are clean, then applying jointly will not affect the approval.
- If your debt-to-income ratio is lower when taking into account both of your salaries, this can be considered in the approval decision, making you more likely to be approved.
- If you’re using higher joint income, then it’s possible to be approved for a larger loan amount.
The Cons of a Joint Application
- The credit approval decision will be based on the lower of your two scores, potentially leading to higher costs and more difficulty qualifying.
Although there’s only one major con to a joint mortgage application, it hits pretty hard. If your partner’s credit score isn’t in the best shape it can keep you from being approved for the loan you want.
What To Do If Your Partner Has Poor Credit
There are so many ways that you and your partner can improve your credit scores, making the two of you the ultimate credit-slaying couple.
- Use a debit card that builds credit (AKA Extra)
- Let the person with the lower credit score become an authorized user on the other’s card
- Have your utility bills and rent payments reported to the credit bureaus
Your credit score is yours to take care of for the rest of your life. In some relationships, the only time your finances blend is when you buy groceries, which is totally okay. But when you share more than just a kitchen pantry, a good credit score can come in handy.
Use both of your resources to do more as a team.