What to Know About Marriage and Credit
August 5, 2016
It is summer time and virtually every weekend now through fall will be filled with weddings. If you are between the ages of 25-40 odds are you will be invited to at least one. Or maybe this is the year you decide to take a trip down the isle with person you love. If that is the case you may be wandering how getting married will affect yours and your spouses credit. The truth is, it won’t. At least not right away. Marriage in no way affects your credit. Contrary to popular belief your credit reports don’t merge when you get married and if you decide to keep your finances completely separate they will impact each other’s at all. But as with most things in life things will not be that simple.
Now while you will start your married life with separate credit reports and scores as time goes by most couples will begin to use each other as cosigners on things like a mortgage, or auto loans, or credit cards. Doing this will make your credit scores dependent on each other as your payment history on those linked items will be the same as their payment history on those items. Same goes for credit utilization ratio and length of credit history.
You may ask yourself “why would married couples start to cosign on everything together”. The reason is simple, by cosigning you are able to use both your incomes on getting your credit. This means being able to buy a bigger house for the family, a nicer car with more standard options, or a credit card with a higher limit. By combining your earning power to more credit you are able to vastly improve your quality of life.
Now while all that sounds good there are some draw back. One that we mentioned before is that now your credit scores are dependent on each other. You miss a mortgage payment it will affect their payment history, they max out a credit card it will affect your credit utilization ration and so forth and so on. So what this means is that like everything else in a marriage communication is going to be key. Both people need to know what is being spent and what the payments are and when everything is due. This is only fair and a good way to ensure that you both enjoy great credit for years to come.