By Ashley Dull
For many marriage-bound couples, one of the most stubborn myths they face when beginning sort their finances is the one insisting that our individual credit scores somehow merge when we get married, creating a single, joint credit score for each new couple.
The fact of the matter is that there are no joint credit scores, nor does your personal credit score take into account your marital status or alter because of a change in your marital status. Neither will changing your name, whether you take on your partner’s surname or choose to hyphenate, affect your credit score. (Although you should notify your creditors and the bureaus of your new legal name.)
That said, It’s important to note that some occasions do exist in which your partner’s credit can have an impact on your own credit. Specifically, any credit accounts co-signed by both partners will be reported on both credit reports, and both partners will be responsible for repaying the debt. This means if one partner misses a payment on a co-signed account, both credit scores will see the negative impact of a missed payment.
Additionally, if both partners apply for a joint line of credit, such as a home mortgage loan, the credit of each applicant will be assessed by the lender to determine the overall credit risk of the loan. While applying as a couple can improve the size of the loan -- two incomes are better than one, in many cases -- a low credit score can have its own costs.
In particular, if one partner has poor credit, the lender may charge a higher interest rate than the higher-credit score partner would receive alone. An increased interest rate on even a percentage of a percentage point can mean thousands over the life of a loan. Worse, depending on the credit of both applicants, the lender may choose to reject the credit application altogether.
While this issue can be circumvented by having only the partner with good credit apply for the loan – then adding the second partner to the account after the fact, if desired – applying with a single income can decrease the size of the loan for which you can qualify. A couple with a joint annual income of $100,000 may qualify for a mortgage of $425,000, for instance, while a single filer with an income of $50,000 may only qualify for a $200,000 mortgage.
In these cases, the best solution may be to focus on cleaning up the credit of the poor-credit partner, then apply again when both partners have good credit. Some issues, like erroneous or incomplete information, can be easily removed through a credit report dispute filed with the credit bureaus. With help from the best credit repair experts, the process can be remarkably simple, and an experienced company may be able to remove other types of negative marks, as well.
You can also start rebuilding a positive payment history with a new credit card, making sure to pay it on time every month. Even with troubled credit, you can find a card to help you rebuild, such as applying for the MCU Secured VISA®, or, for more options, try using a site like CardRates.com to compare credit cards for bad credit.
Of course, some things you will simply need to wait out, letting them fall off naturally as they expire. Legitimate, substantiated delinquencies, defaults, and other negative accounts can remain on your credit report for seven years, at which time they must be removed. The exception to this rule is a bankruptcy discharge, which can remain on your report for up to 10 years. On the plus side, as the accounts age, they will have less impact on your overall credit score.
One last reason to address credit issues sooner, rather than later, is the fact that any joint credit accounts remain the responsibility of both partners as long as both names are on the account -- regardless of the state of your marriage. Whether you end with divorce or make it “‘til death do we part,” your shared accounts will tie you together as surely as (if not more than) the ties of matrimony.
Ashley Dull is the Finance Editor at Digital Brands, Inc., where she oversees content published on CardRates.com and BadCredit.org. Ashley works closely with experts and industry leaders in every sector of finance to develop authoritative guides, news and advice articles with regards to audience interest.
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