How Your Spouse May Affect Your Credit History
Can Your Spouse Hurt Your Credit?
At the altar, you promised to love your partner no matter what. Granted, credit histories, credit scores and the like were probably not on your list of nuptials back then, but when you got married, your credit histories and credit scores in many ways became forever united.
Just as marriage is a partnership in broad terms, that union is also a "credit partnership," where both past and future financial actions taken by one spouse will ultimately affect the other. If, for example, your spouse has a questionable credit history, that will surely affect how you approach many financial decisions that come with the marriage, such as buying a new car or house or signing up for joint accounts.
Marriage and credit
A tarnished credit history can be the result of many different factors, from financial negligence to a job loss or a medical crisis. The first step to fostering a healthy financial relationship is to know the cause of your partner's poor credit history. Talk openly and honestly about it, and learn more about your credit score and credit report in the process. Avoiding discussions on potential credit issues will not make the problems go away.
If your spouse's credit history is questionable, you should consider preparing separate loan applications under both names — or even opening separate checking and savings accounts with the bank. Clearly, credit matters can be a sensitive subject, but your spouse's poor credit can also affect whether you're both approved for joint credit card accounts, as well as for applicable interest rates.
Joint stories, separate credit histories
The good news is that your "family credit" is a reflection of the credit histories of each respective spouse. In other words, if your partner's credit improves and yours stays the same (or also improves), you can use separate credit scores to obtain loans, get a mortgage or get a home equity loan.
Depending on your particular credit circumstances, credit counseling is available. Much like a general financial consultant, a credit counselor may be able to help you develop an overall credit plan that not only works for you, but may also help you avoid a lot of unnecessary arguments at home!
For more detailed information, the Federal Trade Commission website offers tips on how to build a better credit report, including practical ideas like developing a monthly budget, cleaning up credit report errors, and working with your creditors to create a payment plan that you can meet.1
Additionally, you may want to consider getting a secured credit card. These require a security deposit to cover future charges, with the deposit amount equal to the limit on the card. Almost every secured credit card charges an annual fee, and they vary depending on your credit score. But if your spouse has questionable credit and uses the secured credit card for small purchases throughout the month, paying those bills on time can only help matters.
If credit problems persist for your spouse, avoid asking for dual loans or signing up for joint credit accounts. Instead, add him or her as an "authorized user" on credit cards. In most cases, authorized users may use the card but are not directly responsible for payments. The best thing about this arrangement is that when you pay bills on time, the good account activity will also be recorded on your spouse's credit history — hence positively affecting your spouse's credit score.
Paying off debts and credit fraud by your spouse
It's a sad reality that many married people deal with financial difficulties. Even sadder, though, is the fact that spousal credit fraud has begun to run rampant in recent years. Hopefully, you know something about your spouse's spending habits before you get married, but clearly, there are no guarantees. Trial separations, divorces and second marriages may all affect your credit history in some respect, so it pays to keep your guard up. If you suspect any fraudulent financial activity on the part of your spouse, don't simply disregard it. As difficult as it may be, there are organizations that specialize in such fraudulent credit activity. If you have questions, contact any one of the three major credit bureaus for details.