Part of getting married is planning how to share your finances with your partner. This can be a little uncomfortable if your partner isn’t as reliable with credit as you are and has a worse credit score.
While your partner’s credit won’t affect yours immediately after you get married, there are still a few situations when your partner can impact your score.
Separate credit scores and loans stay separate.
Your credit score is your own personal financial figure. The rating agencies won’t make any adjustment to your score or your partner’s as the result of your marriage.
The same holds true for any loans you or your partner might have as individuals. You will stay responsible for your own loans, while your partner’s loans will only affect his or her score.
Joint loan applications look at both scores.
The first time your partner’s credit score will matter for you will be when you apply for a joint loan. This often happens when a newlywed couple applies for a mortgage.
The lender will look at both your credit scores to make a decision.
If your partner has a very poor credit score, this will hurt your application and make it more likely that you will be rejected from your loan or receive a higher interest rate.
Depending on your situation, it may make sense only to take out a loan in the name of the spouse with the better credit rating.
“Managing finances as a
couple isn’t always easy.”
Joint loans affect both credit scores.
One credit problem that often comes up is when a couple gets a joint loan.
Perhaps your partner has trouble qualifying for a car loan or credit card and asks that you cosign the application. In this case, you are just as liable for the payments as your partner.
If your partner is late or misses payments on the joint loan, it will hurt your credit score badly. Be very cautious about dealing with joint loans.
An effective joint loan can help your partner.
When used responsibly, a joint loan can be a great boost to your partner’s credit score.
If you and your partner make the payments on time for your shared loan, it will help both your credit scores. This could be the relief your partner needs to get back to a more reasonable credit rating.
Managing finances as a couple isn’t always easy. However, keeping aware of these credit pitfalls is an important step in avoiding future problems.
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