Tying the knot involves merging several aspects of your and your partner’s lives, including your finances. However, does that mean that marriage automatically impacts your credit scores and reports because you decided to say, “I do”? Not necessarily.
There are a lot of misconceptions floating around regarding marriage and credit. Though the joining of your lives does not result in any direct impact to your or your spouse’s credit reports, it may be worth your while to discern between fact and fiction when it comes to marriage and credit. Use this guide to get started.
Myth: Your Separate Credit Reports Merge When You Say “I Do”
Fact: The information in your credit report stems from your personal information, which is typically any financial information linked to your social security number. Once you get married, this does not change.
That said, if you and your spouse decide to apply for a joint credit card or loan, the information regarding those accounts will reflect on both your reports. This is important to bear in mind in the event of divorce. Even if a judge assigns a joint debt to your partner, there is no guarantee it will be paid, which could reflect negatively on you as well.
Myth: Marriage Directly Affects Your Credit Score
Fact: The joining of your lives does not directly impact either of your scores. That said, your spouse’s credit score can indirectly affect your future together and vice versa. For instance, if you apply for a mortgage together, your spouse’s poor credit score, may stop you from being approved. If you are approved, you may not get the rates or terms you wanted. This is true for every type of loan you plan to apply for together. For this reason, it is important to discuss your credit scores and debt situations before the big day.
Myth: Once You Get Married, All Your Accounts Become Joint Accounts
Fact: Again, all your financial information is based on your social security number and other personal data. This does not change when you get married. A joint account is only created if you apply for a loan together, you open a joint credit account, or you add your spouse as an authorized user on your existing accounts.
Myth: Changing Your Name Affects Your Credit Reports and History
Fact: Despite popular belief, your credit history does not disappear when you take your spouse’s last name. The only thing that will change in your credit reports when you change your name, is your name. Even then, the change will only occur when you update your accounts with your lenders and creditors with your new information.
Myth: Marriage Will Lower Your Credit Score
Fact: Anyone who says that marriage negatively impacted their credit score is probably referring to the debt accumulated on the wedding and honeymoon. The act of marriage itself does not affect any information in your credit reports.
Myth: Your Partner’s Poor Credit Score Will Lower Yours
Fact: Younger generations place a lot of emphasis on credit scores when choosing a partner. Many individuals assume that marrying someone with a low credit score can hurt their own. While a low credit score may be indicative of irresponsible spending habits, it should not evoke concern for your own. However, it should prompt a discussion regarding how you can improve your partner’s score to be approved for major purchases together in the future.
Myth: A Previous Bankruptcy On Either Party’s Report Can Affect the Other’s
Fact: Bankruptcy can have a huge impact on the credit report of the person who filed. If your spouse filed for bankruptcy prior to marriage or opening any accounts together, the consequences are theirs to bear alone. That said, that does not mean you should not try to help your spouse undo the damage. Though the bankruptcy will remain on their file for at least six years, you can work together to boost his or her score so you two can buy a home together, invest in a family vehicle or make other major purchases jointly.
Myth: Disputing Information Regarding a Joint Account On Your Own Report Will Help Your Spouse’s
Fact: Unfortunately, successfully disputing information regarding a joint account on your own report will not change anything in your partner’s. If your partner’s report reflects the same mistakes, they will need to file a dispute on their own.
Myth: Now That You’re Married, You Must Apply for All Loans Together
Fact: Though many married couples do share credit cards, loans and mortgages, there is no rule saying that married couples must pay for everything together. If you want to open separate accounts, you are free to do so.
Marriage may merge your lives, but it does not merge your identities. You still have your unique social security numbers and, therefore, your separate credit information. If you do choose to merge some of your credit info, start small with a joint personal loan.