When you’re about to get married, you and your future spouse have several things to think and talk about with regard to how you are going to manage your financial life together. Your credit scores are one of the many things to consider as you enter into married life.
Many people are surprised to learn that marriage itself doesn’t do anything to your credit scores. They don’t combine when you get married or get averaged out. You keep your pre-marriage credit, as does your spouse. But marriage can affect credit indirectly in several ways.
The main impact of marriage on credit is that the debt you enter into together will appear on both of your credit reports. Of course, this is only true if both of your names are on the debt. Therefore, if you take out a car loan together and both sign the loan documentation, that loan and all of its payments will appear on both of your credit reports. The same is true of credit cards, mortgages, and other types of loans or lines of credit.
Therefore, although your credit scores stay separate, your financial choices as a couple can affect both of your scores. On the flip side, both of your credit scores can affect your financial choices. The biggest area this applies to is your mortgage. If you both earn income that you need to use to qualify for a mortgage, then both of your credit scores will count as well.
A spouse with a low credit score can cause you to have to pay a higher interest rate, which could cost you hundreds of dollars per year, and thousands over the course of your mortgage. Therefore, it’s important to talk about your credit scores before you get married and work together to improve both of your scores.
One great way to improve your scores is to add the spouse with a lower credit score as an authorized user or joint account holder on the credit cards of the spouse with the higher score. This puts all of the credit history on the spouse with the low score’s credit report, ideally raising the score.
Another strategy for improving your credit is to work together to pay down the debt of the spouse with bad credit. Reducing credit card balances and catching up on accounts with late payments are two major ways to boost a bad credit score. Although there’s no way to erase a history of late payments, as you replace the bad habits with good ones, the score will gradually improve to reflect that.
Having good credit scores makes it easier for you as a couple to borrow money at low interest rates. It also can affect your car insurance premiums, ability to find employment, and ability to rent a home or apartment because all of these entities often check your credit. Therefore, talk about your credit scores before tying the knot and make a plan for how to manage credit wisely as a couple.