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At its best—and most romantic—marriage represents a beautiful joining of two souls who have pledged to take on the challenges of life side-by-side, till death does them part. But as far as your credit is concerned, a marriage license doesn't matter at all—debts, missed payments and everything else in your credit history are still the responsibility of the individual, not the couple.
An imbalance between your and your partner’s credit can raise some awkward situations as you make financial decisions together. In fact, a 2015 report by the Federal Reserve found that couples who shared a similar credit score when they began the relationship tended to last longer than those with highly disparate scores. But since you probably didn't ask for a credit check before the first date, here's how to handle a significant other with a low credit score.
Flying Solo
A lender typically doesn't care about your marital status when you apply for a loan or a new line of credit. That's good news if your husband has a credit score hovering around 600 but yours is pushing 750. You can still receive all the rewards and benefits your good credit entitles you to.
However, most married couples expect a certain intertwining of their finances, and many people count on their partner as someone who can help them reach lofty financial goals, such as getting a mortgage for a house. Often, couples apply jointly for a home loan, so lenders consider the financial assets and credit scores of both applicants to determine whether they will approve the loan and at what terms and interest rate.
Your application is usually stronger when you apply jointly, because both of your incomes are considered, which could allow you to qualify for a bigger mortgage. But if your spouse has lousy credit, the drawback of his or her low credit score outweighs any benefit you gain from the additional income and will likely hurt your chances for approval—or increase the interest rate you have to pay.
That's because credit scores, even on a joint application, are still evaluated individually. There's no such thing as a "joint credit score," and creditors look at the weakest link in the chain when making their decisions.
So long as your spouse has terrible credit that disqualifies you from getting the loan of your dreams—or makes it less affordable—your only recourse is to apply by yourself. Of course, that means banks won't take into account your partner's income and financial assets, which may prevent you from getting a mortgage for a more expensive home, even though you could afford to make the payments with your combined income.
Lend a Helping Hand
Any successful couple will tell you a good marriage rests upon a foundation of compromises, but accepting your partner's bad credit doesn't have to be one of them. One way you can help buoy your spouse's credit is to make him or her an authorized user on one of your credit cards.
This means your spouse receives a card linked to the account and can charge as much as he or she wants, but you’re on the one on the hook for making the payments on time. The benefit to your spouse is that your positive payment history from that account is added on his report, helping to raise the credit score of your spouse.
While becoming an authorized user should help, the boost to your spouse’s credit score won’t be as dramatic as having positive payment history from their own account. What could help your spouse even more is to open a joint account credit card.
This means both of you share equal responsibility for managing the account and making payments. If one of you messes up and forgets to pay the bill, you both suffer. By the same token, if you both keep up with your payments, your spouse's credit will get a boost—and teach him or her the crucial habits to keeping a good credit score.
Planning for the Worst
Nobody likes to think their marriage may be destined to end in divorce court, but you know what's more unpleasant than considering an unsuccessful relationship? Being broken-hearted and broke. And if your spouse has bad financial baggage, it can be very easy over the course of a marriage for your partner's problems to become your problems.
In terms of credit, this means maintaining at least one of the accounts you opened prior to tying the knot separate from your spouse—that means he or she doesn't co-sign onto the account. Adding him or her as an authorized user should be fine, because you can remove your spouse without his or her permission from the account at any time. That’s not the case with joint accounts.
If the only way for your spouse to begin building credit is to declare bankruptcy, remember that such an action will only discharge the debt he or she is liable for and not any unrelated debt that you may carry. The exception to the rule is if you live in a state with community property laws—Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin—then a debt you or your spouse incur after the marriage will also be discharged. And no matter where you live, any debt you jointly own as a couple (such as a joint credit card account) is also subject to the bankruptcy.
Financial stressors can rip apart even the most loving relationship, but armed with this information you can hopefully head off trouble before it leaves you single and swiping on Tinder.
The article, How Your Spouse's Bad Credit Affects You, originally appeared on ValuePenguin.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
