When two people get married, there’s a lot more on their plates than planning the wedding. Creating a shared future involves many logistical, emotional, and financial aspects. With credit and money matters, there aren’t always straightforward solutions. That’s why understanding financial practices, as well as individual and joint credit, is vital. Here are some things you need to consider as you plan your financial strategy as a married couple.
Do Credit Reports Combine After Marriage?
As Investopedia explains, credit scores and ratings measure each person’s creditworthiness. These ratings result from an individual’s history of borrowing and repaying debts. Unique credit reports are specifically tied to each person’s Social Security Number. While name changes alter your report and file, your old credit history will continue. Even so, The Balance warns that a credit bureau may accidentally create a split file after your name change. If this occurs, you’ll need to contact that bureau to have your file re-merged.
So, what does happen when you apply for a credit account in your name after you get married? As The Balance’s Latoya Irby clarifies, the lender only evaluates your credit history. Your and your spouse’s scores and profiles remain separate, which means neither improves or declines on its own.
Individual Effects on Joint Finances
Since your credit histories are separate, you and your partner gain both perks and disadvantages. On the upside, the spouse with superior credit can score better interest rates, limits, and repayment terms. Overall, these lower payments take less of a bite from your household budget.
On the flip side, two vastly different credit ratings may harm you in joint applications. This is especially true with car and home loans, as MyFico points out. Lenders pull both your histories and having one partner with poor credit may result in higher interest rates or even failing to qualify. Also, unwise individual decisions cause negative impacts on your collective financial health, including:
- accumulating more debt than you can afford
- late or skipped payments
- acquiring new debt to pay off older accounts
- making only monthly minimum payments
Devising a Post-Wedding Credit Strategy
Regardless of your personal creditworthiness, the two of you can craft a smart plan for handling credit. NerdWallet’s Claire Tsosie offers a few helpful suggestions. Your first order of business involves discussing some critical financial issues, such as:
- spending habits
- saving goals
- credit history
- credit debts and liabilities
It’s also important to establish ground rules for spending since you need to be on the same page about major purchases. If one of you has less than stellar credit, you should decide how to apply for offers. Individual applications may result in better terms while joint ones could improve the lower credit rating.
Tsosie recommends starting with a joint credit card account before applying for mortgages or other major loans. Alternatively, you could add your spouse to a credit card as an authorized user. Whichever approach you adopt, you must discuss your collective goals. Some cards offer cash back for food and fuel purchases or travel rewards, so it’s vital to know your priorities and choose a card that fits them. For more information, check out The Balance’s guide to credit card rewards programs.
Communication, Planning, and Honesty Are Key
Contrary to common misconceptions, a couple’s credit histories and ratings do not merge after they get married. With that said, your credit decisions will still impact your collective finances. Communication, collaborative planning, and wise spending habits are all vital both before and after the wedding. These practices lay the groundwork for successfully handling credit as a married couple. With these good habits, you'll build a solid financial future together and hopefully avoid serious problems down the road.
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