This is one of the most common questions we hear from newly married or soon-to-be-married couples that don’t understand how the credit industry works. Indeed, some people’s concerns over implications on their credit scores often lead to second thoughts about whether or not they should actually tie the knot.
The good news
Nothing will change after your get married when it comes to your credit scores or new items showing up on your credit report other than a possible name change. Both of you will still have separate credit reports. Neither of your credit report nor credit history will magically appear on each other’s report. No one will be able to see your spouse’s credit score by just looking at your credit score and vice versa.
Your credit score will not drop just because you’re marrying somebody who has a bad credit score and history. On the contrary, you could help your spouse, who has a bad credit score, to improve her bad credit.
It’s not true that when a wife changes her name she will be able to erase her credit history. Credit reports are anchored to your social security number and not by your name. Whether a woman changes her name or not once she gets married, her credit score will remain unaffected. The only thing that will change if she does adopt her husband’s name is her surname, but the rest of her credit history will continue to appear the same. This is same for a male if he changes his name as well.
How Your Spouse’s Credit can Impact Yours
The only way that you can affect each other’s credit scores is if you obtain a joint loan or credit card together. Both of your creditworthiness will be checked before this can be approved. If both of you have unsound credit, then you may not be approved. On the other hand, if only one of you has bad credit and the other one has excellent record then this joint credit card or loan can be a way to help the other person’s credit score improve over time. The other way would be to put the spouse who has bad credit as an authorized user on one of the credit card accounts held by the person with good credit. This credit card must be in good standing, with good payment history, and a good debt to limit ratio to make sure the positive impact is fully realized.
Many credit cards or loans, including mortgage and car loans, will deny a joint application if one of the applicants has bad credit even if the other has great credit. This is a very common problem for married couples trying to buy a home together. If you need both incomes to qualify for the home loan then both applicants would have to apply. Both applicants have to meet the loan guidelines and qualifications for credit individually or they will likely be denied. In addition if the couple is approved for the loan despite one of the applicants having worse credit than the other then their interest rate is likely to be much higher than if they both had great credit. Some choose to leave the spouse off of the loan application who has bad credit, but then their income will not be accounted for and thus will not be included in the credit decision making and the debt to income ratios.
It is a good idea for couples looking to buy a home together to find out where their credit stands. If one of the applicants needs to improve their credit score it is a good idea to contacts a good credit repair company to help you get qualified for the mortgage and with the best possible interest rate.