So you finally think that you have it all. You got married and think that life could not be any better. Well, it is great that you have settled down, but many never even think about their new spouses’ credit. What if it could harm your credit? Will it be happy ever after for you? Here are some common myths about marriage and credit.
Many say that a credit score is merged with their spouse’s once they have become married. This is the furthest from the truth. All credit reports and scores are based solely on the individual, and it does not matter if you are married or not. Even if your new spouse has horrible credit, then it will not effect what is written on your credit report. Nothing on your credit report will change once you have gotten married.
Others assume that once they are married, their income is raised, so their credit score will be raised. But in truth, income plays no role in credit scores. The only added benefit of this would be making more to make at least the minimum payment, if not more, each month.
Another huge misconception is that if the credit cards are in the one spouse’s name, the other spouse is safe. This is not always true. Yes they are in the name of one spouse, but a spouse can be held responsible for any debt that was incurred while married if they are living in a community property state. These states include Nevada, Arizona, California, New Mexico, Texas, Idaho, Washington, Louisiana, and Alaska. Alaska can also be included in this list as it is an opt in state. But do know that in any state, a collector will try to come after their money no matter who the card’s name is in. And if you, as the other spouse, benefited from the purchases, they may have a right to do that.
Now what happens if the marriage does not work out? Well think of it this way. When the divorce goes to court, the judge will likely divide up the cost of all the debts that are owed between the two.
Now, if you are getting divorced, and the judge has ruled that your soon to be ex spouse has to pay for the credit cards, do not start cheering just yet. No matter who is said to pay the debts, the credit card company will come after both parties. They do not care who has to pay it as long as they get their money that is owed to them.
When you marry, you can have the option of keeping individual accounts or joining them together. The decision is based solely on what the couple wants to do. There is no right or wrong answer for this. The couple must sit down and discuss what options they have. Is it in their best interest to have a joint account? Is there a need for a joint account or have you been managing just fine with separate accounts? Look at the broad picture and see what you really want to do. No one can tell you what to do, the decision must be made by you and your spouse.
To go along with joint accounts, do not automatically assume that once you are married, you can co-sign for your spouse using his or her checking account or credit cards. The only way you can co-sign is if you have your name added to the account. If you do wish to be a co-signer to the account, you will need to call the credit agency and request that your name be added to the account. Adding your name in this manner will not effect your credit score. However, if you wish to add your name to a loan, this will usually require that the loan be refinanced.
Ladies often assume that once they change their last name, their previous credit history will be erased. However, your last name will only change once you report this to the credit agencies. Your maiden name will be listed but your new name will also be listed as an alias. Please take note that as this happens, and the transactions are in place for this, there may be errors that make their way onto the credit report so it should be looked over very closely once the change has been made.
Never assume that the best way to help your spouse with credit history is to make him or her an authorized user on your account. This can help him or her build a good credit history, but only if they are responsible for their actions. The credit score will only be as good as they make it be.
Marriage can scare many off when they think about credit to go along with it. Play your cards right and be responsible. Know what you and your partner both want, and know how things will effect you and your spouse, both in marriage and in divorce, and you can be sure that your financial life stays healthy.
*The above content is for informational purpose only. It does not constitute professional financial advice. If you have more questions, please reach out to a financial advisor for more information.