Marriage & Your Credit Score: Q & A

wedding credit cardIt’s that time of year again. Spring is here, so the annual rush to the altar can not be far behind.

But wait. Have you checked what this marriage will do to your credit score? As a couple you may want to purchase furniture, a car or even a house. For that, you will need good credit. How you handle your credit after marriage can have a big effect on your future plans.

Won’t our credit will automatically merge after marriage?

Most people think that credit is automatically joined as soon as you tie the knot. NOT TRUE. In fact, assuming both parties to the marriage already had credit scores, these will continue to exist separately UNLESS the couple applies for a car loan, say, jointly or a credit card jointly.

My spouse defaulted on a loan. Will my credit score be damaged?

Actually, whatever your spouse has on his or her credit will have no effect on you at all UNLESS you apply for credit jointly. This means if one spouse has good credit and the other bad, it is imperative to keep them separate. That way if the spouse with the good credit can qualify alone, then he or she can buy a car or a house for the couple using his or her good credit alone.

We both have good credit, so we can merge our credit., right?

This is true EXCEPT it is always a good idea for each spouse to keep some credit in his or her name alone. That way if something happens to the other spouse, a job loss, for instance, the entire credit of the couple will not be damaged.

My spouse works and I stay at home.  Shouldn’t my spouse have the credit?

Again, NO. Think about it. If your spouse dies or loses his job, then the entire credit of the family could be lost. Always keep at least some credit separate.

Merged Credit After Marriage v. Separate Credit

Merged Credit After Marriage

Think of it this way. Let’s say you and your spouse Bob decide to buy a car. You apply for the loan jointly and start enjoying the car and making the payments. Then, Bob loses his job and the bills pile up. You both realize you really cannot manage that car loan, so you let it go. The car loan goes into collection and eventually the car is repossessed. Now both your and Bob’s credit is ruined and your family has no more access to credit.

Separate Credit After Marriage

Here’s another scenario. Jack and Jill keep their credit separate. Jack buys a new car on his own and makes the payments until he loses his job. Then, the couple sits down and figures out that they can pay their bills for a few months of unemployment, but after that no. So, after a few months they stop paying on Jack’s new car and credit cards and pay only debt in Jill’s name. Jack’s credit is trashed, but Jill’s remains the same. That way at least the couple still has access to credit during their time of need. Of course, they could also decide to pay all the bills in Jack’s name instead of Jill’s name.

The important thing is to keep someone’s good credit. Do that by keeping some credit separate.

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