Credit score Q&A: “Does my spouse’s credit affect mine?”
So you’ve got excellent credit, but your spouse’s credit isn’t so hot. Does this mean your spouse’s bad credit history will affect your pristine past? Not exactly.
Just because you’re married or living together doesn’t mean your credit history is commingled, which may or may not be a good thing.
It doesn’t just blend together once you tie the knot; there is no joint credit score.
In fact, you could marry someone and keep your credit accounts separate if you so desired, though such a scenario would probably be unlikely.
Often times when two people get hitched, they share credit cards, auto loans, mortgages, and so forth.
As a result, any late payment or derogatory event (collection, charge-off) on these shared accounts would affect both parties involved.
So if the two of you applied for a new mortgage and missed a payment, you’d both see your credit score take a hit. But if only person applied for the loan, only one person would be affected.
The takeaway here is that only joint accounts affect both people’s credit scores. And not all accounts are shared through marriage. It’s completely voluntary.
Joint Credit Cards vs. Authorized Users
Nowadays, it’s difficult to actually find a so-called “joint credit card” to apply for. These are credit cards where two applicants sign up concurrently for a single card.
The card issuer considers both credit scores when determining approval and both applicants are on the hook for payments going forward. In other words, a missed payment will sink the credit scores of both applicants, not just one.
This differs from authorized user accounts, which only penalize the primary cardholder for any missteps.
However, the authorized user gets the benefit of the credit line without the consequences of missed payments or related credit score dings.
So clearly there’s quite a distinction here. The downside to authorized user accounts is that the credit history isn’t always reported or reflected in the individual’s credit score.
It’s Not All Bad
If you marry someone with poor credit, you can actually nurse their bad credit score back to health by applying for new loans together and paying them back on time.
Additionally, you can designate your spouse as an authorized user on your healthy credit accounts, which may benefit their credit score over time.
At the same time, both your credit score and your spouse’s credit score must be considered when you open new joint accounts.
For example, if the two of you apply for a mortgage, the bank or lender will likely use the lower mid-score from the three credit bureaus.
Your credit score: 765
Spouse’s credit score: 619
In this case, your mortgage approval and subsequent interest rate would be based on your spouse’s lower 619 credit score.
This explains why some borrowers exclude their spouse with bad credit when applying for a loan, assuming they can qualify on their own. Of course, that would require income and assets from the sole borrower to get the job done.
Apply for Credit Individually After You’re Married
You can continue to apply for credit in your name only after marriage and keep your accounts separate from your spouse. Sure, it’s great to have some joint accounts, but there’s no need to merge everything.
As long as there is trust, you can continue to maintain independent credit accounts and doing so may actually be beneficial if one individual slips up at some point. That way they won’t harm the other. I see this as diversification if anything goes wrong down the road.
Additionally, each spouse can sign up for lucrative credit card bonuses separately and enjoy double the points and miles! This could be helpful if you’re planning a vacation and needs lots of miles.
In conclusion, you are in full control of your own credit score, and you ultimately decide whether to get your spouse involved or not.
Just remember, old habits are hard to break, so a spouse with poor credit could eventually take you down with them.