How to Protect Your Credit After Getting Married?

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No matter how financially compatible you two may seem, establishing your financial future can be quite a challenge. Now if you two have the most unlike credit histories, it may not be wise to blend them together, or else one of the two can be dragged down.

Your credit will not be merged after marriage

Your credit report is not like a conjugal property that will be shared and declared as one after you marry. Each one of the couple will retain his and her own credit history. However, your credit reports will both list accounts that you and your spouse opened as a joint account, accounts with one of you named as a cosigner, or whenever a spouse is added in an existing account whether as an authorized user or a joint account holder.

When can bad credit affect you?

Even if you have good credit, your spouse’s bad credit can affect you whenever you apply for a joint credit. For example, if you apply for a home, credit, or insurance jointly, the business you are applying for will check both of your credit histories. If one of you has negative information listed in your credit report, your application will most likely be denied, even if one of you has spectacular credit. On the other hand, even if your loan or credit application got approved, you might have to suffer higher interest rates than if both of you had good credit.

Why should you apply for credit individually?

Applying for credit individually can help both of you avoid putting your own credit at risk and maintain active credit even if one of you has been gone. However, it pays to know that it only works when you have income and assets high enough to qualify for the loan you are applying for. Large loans such as mortgage may require you to apply jointly.

Knowing the risks

Unfortunately, there are still some downsides when applying for credit individually. When you apply jointly, both of you will be legally responsible for repaying the debt, but if you apply individually, and let’s say your spouse ran away, you alone will be held responsible for this loan, and only your credit will be damaged if you fail to make the repayments.

When to use an authorized user or joint account holder?

If you assign your spouse as an authorized user of a certain account, he/she can use the credit but won’t be held liable. Meanwhile, if you designate your spouse as an account holder, he/she can use the credit and becomes liable for the debt at the same time. There are some things you should know about before you decide.

  • It could be easier to remove an authorized user than an account holder from your account later on.
  • Your positive credit history for that credit account will be factored in on your spouse’s credit score if he/she becomes a joint account holder.

Your credit score will not be affected when you assign your spouse either as an authorized user or account holder unless he/she uses up all the available credit.

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