Getting married is an exciting time! However, if you are not careful, you could sink your credit score. While marriage is filled with romance, excitement, and overwhelming moments, it can also introduce financial challenges.
Are you and your spouse on the same page financially? If not, get on that boat before getting married. Some estimates suggest that 20-40% of all divorces are due to financial problems. You don’t want to become a statistic!
Does getting married affect your credit score? Marriage typically doesn’t directly impact credit scores, but it may have long-term financial implications if not carefully planned. Below, we’ll guide you through what you need to know to help protect yourself and your happily ever after.
MoneyLion offers a free and convenient way to find offers from our trusted partners to help you improve your credit — such as credit monitoring, credit report disputes, and getting credit by paying bills. A good credit score can lead to lower interest rates and increased borrowing power on loans and credit cards.
What happens to your credit when you’re officially married?
First, the good news: credit files aren’t merged when you tie the knot. Instead, they remain separate. Neither spouse will see a bump or drop in their individual credit score just because they get married. However, spouses can positively impact each other’s credit scores.
The only notable difference to your credit file happens if you change your name. It would help if you let lenders or creditors know that your name has changed so that they can update their records.
However, there can be perks! For instance, adding a spouse as an authorized user can help boost their credit score if one spouse has a high credit rating.
Does changing your last name affect your credit history?
Your credit history is tied to your Social Security number. Even if you take your spouse’s last name, it will not impact your credit score. To maintain an accurate credit report, it’s essential to ensure that your new name is accurately recorded with credit reporting agencies.
Does my bad credit score affect my spouse?
The good news is that even if you have a less-than-stellar credit score when you get married, it won’t affect your spouse’s credit file. Credit activity before marriage remains on each individual’s credit report.
Yet, if one spouse has a poor credit score, it may affect the couple’s ability to secure credit jointly in the future. When applying for joint loans or opening joint accounts, lenders consider the credit histories of both spouses. Alternatively, lenders might impose higher interest rates or require larger down payments, even if one spouse has a good credit score. For that reason, working to build both spouses’ credit scores before applying can help you get better loan terms.
Do joint credit reports exist?
Joint credit reports are a common misconception about credit scores and marriage. They don’t exist. Credit history is always associated with your Social Security number, and marriage doesn’t result in the creation of a joint credit report.
Yet, joint account activity can negatively impact both spouses’ individual credit scores when applying for credit as a couple in the future. For example, missing a joint credit card payment can negatively impact both spouses’ credit scores.
What if you live in a community property state?
While joint credit reports aren’t a reality, some states make both spouses responsible for any debts incurred during marriage. In community property states, spouses share responsibility for debts acquired during marriage. This applies even if only one spouse’s name is on the loan.
In states like Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, spouses share equal responsibility for credit obtained during marriage. In community property states, both spouses are liable for debts, regardless of whether one spouse is unaware of the debt. The remaining states follow common-law rules allowing spouses to take out debt as individuals.
Is debt shared after marriage?
Debt-sharing after marriage varies by state. In common property states, both spouses are responsible for debts. In contrast, in other states, spouses are liable for debts only if both names are on the debt. Shared debts incurred after marriage hold both spouses accountable.
Should married couples consider combining their accounts?
Whether married couples should merge accounts like savings, investments, and credit cards depends on individual needs and account types. Studies, like one from Northwestern Kellogg School, suggest that joint accounts can enhance relationship satisfaction by promoting financial communication and alignment on priorities.
However, some couples prefer separate accounts due to differences in earnings and spending styles or for the sake of independence.
There are also different types of accounts with specific considerations. For example, most couples could benefit from at least one shared savings and checking account for shared savings goals and common expenses. Likewise, there are advantages to having both shared and individual investment accounts for long-term savings goals.
Having separate credit cards can make sense to avoid affecting each other’s credit scores, even if you have other shared accounts. If you want to maximize the points or miles you can earn, each having your own credit card can help you earn double the credit card sign-up bonuses.
For example, a common strategy in credit card “hacking” is having one spouse apply for a credit card with a sign-up bonus and a referral code. Then, spouse one “refers” to spouse two for the same offer. Both spouses will get any referral bonus plus the sign-up bonus if you meet the minimum spend.
Does having a joint credit card account affect your credit score?
Yes, having a joint credit card account will affect both cardholder’s credit scores. Maintaining a low (30% or less) credit utilization ratio and making on-time payments should help both spouses build a positive credit history. Ideally, aim to pay off the credit card in full each month. The risk of a joint credit card account is that a late payment or too much debt will hurt both spouses’ credit scores.
Tips for married couples looking to boost their credit
You have options to help boost your credit score as a couple with these practical tips:
- Become an authorized user: If one spouse has a high credit score and the other has a low credit score, you can add the spouse with a low credit score as an authorized user on the other spouse’s credit card account. The authorized user’s credit score won’t be affected by the primary cardholder’s credit score. But, the authorized user’s credit score could see a boost.
- Work to pay off debt: Your debt-to-income ratio will affect your ability to qualify for a loan or mortgage and your credit scores. Whether one person in a couple carries more debt, make a plan together to pay it off as quickly as possible.
- Strategize when applying for loans: When you’re ready to apply for a loan, if you both have income and your combined debt-to-income ratio is lower than one of you individually, applying for loans together can help you qualify for better terms or lower interest rates. On the other hand, if one spouse can qualify alone with better terms on a mortgage, you could apply alone and still add the other spouse to the property deed.
Protecting Your Credit Score
When you get married, your credit score shouldn’t drop or boost since it’s linked to your Social Security Number. But you and your new spouse can help each other build and maintain good credit scores.
Consider maintaining separate credit cards to earn more credit card bonuses potentially. You can also become an authorized user to help either partner increase their credit score. Other financial decisions, like shared or separate bank accounts, won’t directly affect your credit scores. But communicating clearly (and regularly!) on spending, budgeting, saving, and future financial goals can help you both long term.
FAQ
How can I protect my credit score when getting married?
To help protect your credit score when you’re married, you can keep separate credit accounts and bank accounts. You can also work together to eliminate debt.
Can getting married help me qualify for better loan rates?
Yes, you could qualify for better loan rates if your combined income exceeds your individual income. However, if married couples apply together, lenders will also look at both of your credit histories, debt, and type of debt, which can affect loan approval.
Does getting divorced impact my credit score?
A divorce won’t impact your credit score directly, but how you separate your accounts could. For example, if you still have a combined line of credit and one spouse makes significant expenses or maxes out the credit line.
