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Getting married can be an exciting time as it confirms and celebrates your commitment to each other. After marriage, you’ll have all sorts of adventures to share, but your honeymoon phase can be cut short if bad credit hampers your ability to achieve financial goals together, such as owning a home, buying a new car or even merging your cell phone carriers. Money issues can put strain on any relationship, but if you’re upfront about them from the get-go, you can get ahead of potential roadblocks.
In fact, money caused the most strain in marriages (36%), outpacing health concerns (17%), according to an online survey conducted by The Harris Poll for Ally Bank. Relationships among younger adults (age 18-54) were nearly twice as likely (44% to 23%) to cite money as the main stressor compared to older adults (age 55+).
We’ll review some common questions you might have about your credit after marriage and provide best practices for maintaining good credit scores during marriage.
Do married couples have a joint credit report?
No, your credit reports won’t be merged after marriage. You will still maintain an individual credit report that’s built around the actions you take with your credit accounts. Unless you open joint accounts, your spouse’s credit-related actions may not affect your credit history or score.
Will I lose my credit history if I change my last name?
No, you will still have your credit history if you change your last name.
“When someone changes their last name, it is automatically added to their credit report after they notify their creditors of the new name,” according to Experian’s website. “Applying for new credit using the new last name will also result in the name being added to the report.”
So, after your name is officially changed, inform your current creditors and use the new last name on future credit applications. The name change will be relayed to the credit bureaus and reflected on your credit report. You’ll most likely still see your old last name on your credit report — in addition to your new last name — but that’s OK. You can check that your credit report is up-to-date by requesting a free copy of your credit report at AnnualCreditReport.com. You’re allowed one report from each credit bureau (Equifax, TransUnion and Experian) every year.
Will my bad credit affect my spouse?
Yes, in most cases your bad credit will affect your spouse in one way or another, but it’s a loaded question. If you have a bad credit score, that alone won’t affect your spouse. Your past credit history can’t directly lower your partner’s credit score. However, any credit-related actions you take jointly with your spouse, such as applying for a mortgage or buying a car, will be affected by your bad credit score.
When you apply for a loan together, the lender will review both your and your spouse’s credit. If you have bad credit and your spouse has excellent credit, your poor score may lower approval odds and reduce the chances of receiving the best interest rates. It’s not as simple as the lender only considering the higher credit score — both scores are considered in the decision process.
After opening a joint credit card account or adding your spouse as an authorized user to your card, the actions you take — whether positive or negative — will be reflected on both your and your spouse’s credit, and vice versa. It’s key that you set clear guidelines with shared accounts so you can get the most benefit and least penalties. Check out some best practices below.
Best practices for maintaining credit card accounts with your spouse
Once you’ve exchanged vows, you may want to open financial accounts together, such as credit cards, to streamline spending and bill payment. While this can be helpful, there are some guidelines you should mutually agree on to make sure accounts are used responsibly. Just know, joint credit card accounts are far and few between, but many credit cards provide an alternative — adding authorized users. An authorized user has no liability, versus a joint account holder that shares liability.
Here are some best practices for maintaining credit card accounts with your spouse, whether you open a joint account or become an authorized user on each others’ accounts:
Always pay on time
Payment history is the most important factor of your credit score, making it important to pay all bills on time. If you can’t afford to pay off the entire bill, make at least the minimum payment. Paying at least the minimum due helps you avoid late payment fees and penalty interest rates — plus, it also sends positive information to the credit bureaus.
Set spending limits
As with any credit card, you should have clear spending guidelines in place. Whether it’s with a joint credit card account or as an authorized user, make sure you review how much you can reasonably afford to spend together each month. This can help limit overspending and reduce the likelihood of falling into debt.
Hold each other accountable
It can be easy to brush off your spouse’s bad habits, whether it’s forgetting to pay a bill or spending more than they should, but those decisions can work their way back to you. The results can mean late payment fees, debt, and negative effects to your credit (for joint accounts). It’s a good idea to be open with your spouse and discuss any issues that arise the first time around before it becomes a bad habit.
When you get married, you may not be too worried about your credit history and how it can affect your spouse or how their credit can affect you, but it’s something that shouldn’t be overlooked. Depending on what credit scores you both have, it may be relatively simple to obtain new credit together or not. Just know, shared accounts can make or break your credit, so be sure to set clear guidelines for spending and bill payments. And, be aware that you’re both equally liable for all actions taken on a shared account.