Does Marrying Someone With Bad Credit Affect My Credit Rating?
“Will marry someone bad credit affect my credit rating? The short answer to this question is: no, it is not. Your credit report will remain yours credit report, and your new spouse’s credit report will remain theirs. Ditto for your credit rating.
But the longer answer is more complicated. Your spouse’s credit can affect your finances in a number of other ways. Here are some basics that you and your spouse should understand.
Key points to remember
- Marrying someone with bad credit will not affect your own credit history.
- You and your spouse will continue to have separate credit reports after you get married.
- However, any debts that you jointly incur will be reported on your credit report and that of your spouse.
How credit scores work
Your credit score is an assessment of your creditworthiness, based on items on your credit report in one or more of the top three credit bureaus. Your credit report includes your borrowing history and your history to pay off your debts, such as monthly credit card bills, on time.
Having a good credit score is important not only when you want to borrow money to buy a car or a house, but also when you don’t even borrow. For example, an insurance company may look at your credit score to establish your rates; a landlord might take this into account when deciding whether to rent you an apartment; and a potential employer might check it out before offering you a job. In other words, it’s used to gauge how likely you are to be – or risky – in a number of situations.
You may not have a credit history before getting your first credit card, but after that it will accumulate month after month. By the time you get married, you may have amassed a substantial record.
What Happens to Your Credit When You Get Married?
As a married couple, you and your spouse will continue to have two credit history, linked to your respective social security numbers. Marriage does not change that: there is no “couple’s credit report”; in fact, the credit bureaus don’t even record marital status. If one of you (or both) changes your name (one of you takes your spouse’s last name, or you both cut your names off, for example), it won’t affect either more your credit and you don’t have to notify the credit bureaus of the name change.
However, marital status can change your credit in the future if you apply for loans jointly, open joint accounts, or incur any other debt together. Therefore, before you get married and periodically thereafter, you should take a comprehensive look at your financial records, including salaries, savings, investments, and debts, and review your credit reports. You need to have a clear idea of how each of you is handling money as you go on your wedding trip together.
Take out a joint loan
If you decide to take out a loan together with your spouse, such as a house or a car, your lender will likely check both of your credit histories before deciding to grant the loan. If your spouse has a lousy credit history and you have enough income to handle the loan repayments on your own, you might consider taking out the loan on your behalf only. If you don’t, you probably won’t be able to borrow as much and borrow at higher interest rates than if you applied with your own good credit. In this case, two scores are no better than one – the lower score will drag you both down.
If you are successful in securing a joint loan, your lender is required by law to report the loan and your payment history in both of you names. So keep in mind, for example, that if you have a joint auto loan and you miss payments, they will show up on your credit history as well as that of your spouse.
3 Steps To Helping A Spouse With Bad Credit
If your spouse has a bad credit history, you can help them create a more positive one and improve their credit rating. (Rest assured that one of their privileges, unpaid debts, bankruptcies, and the like will not end up in your credit history. But you may want to keep your accounts separate (no joint accounts, joint credit cards, consolidated student loans, etc.) until your spouse’s credit improves.)
Here are three steps you can take together:
Get the problem under control.
First, your spouse should get a free copy of their credit report from AnnualCreditReport.com. That way you can review it together and find out where they are at (while you’re at it, it would be a good idea to get yours, too). Discuss what led to the problem, for example, a layoff, overspending, or a lack of planning for emergencies. It is important to be open and not to be judgmental.
Focus on repairing the damage.
Decide on a plan that will solve the problems. Make a list of collection accounts and amounts and pay them– one at a time, if necessary. Do late payments lower their credit rating? Make sure they get paid on time in the future. As soon as possible, reduce credit card balances to less than 30% of the credit line to reduce credit usage (one of the components of credit score). In addition, your spouse might consider working with one of the best credit repair companies to remove particularly stubborn negative marks.
Track your progress.
Get a credit report every few months to review the progress you’ve made together, then adjust your plan as needed.
The bottom line
Negative information in a credit report will not haunt your spouse forever. It becomes less important over time and will eventually disappear completely. By law, credit bureaus are required to withdraw it after a certain period.
The length of time a late payment record remains on your credit report. Bankruptcies can stay on your report, affecting your score for either seven or 10 years, depending on the type of bankruptcy.
Also, the older the negative information, the less impact it will have on a credit score. And if you both pay your bills on time and avoid excessive debt in the future, it won’t be many years before your spouse has a good credit history as well.