Protect Your Good Credit After Marriage

Learn how a spouse's bad credit could affect you, how to protect your credit, and how to help improve your spouse's credit.

When you’re planning the wedding, it’s a good idea to take stock of your future spouse’s financial health to avoid any surprises as you start your new life together. If your credit is good, but your spouse has suffered financial difficulties, planning now can minimize the consequences of bad credit while maximizing the positive effect of pooling together your resources.

Understanding Credit and Marriage

A credit score attaches to a specific social security number so as a married couple, you won’t have a joint credit report or a joint credit score. Each spouse takes the credit history he or she enjoyed (or suffered) while single into the marriage. The reports—and scores—will always remain separate.

Having separate credit reports doesn’t mean that you’ll never have to contend with your spouse’s less than ideal credit history. While it’s possible to keep your finances separate for most purposes, sometimes it’s not practical or possible to avoid subjecting your spouse to credit scrutiny. For instance, if you want to purchase a home together, you might be able to qualify for a mortgage on the strength of one spouse’s credit history and income. By contrast, a potential landlord might condition a lease on a review of both credit reports.

To learn more, see Credit Reports and Credit Scores.

Where to Start: Review Credit Reports

Many financial professionals encourage a couple contemplating marriage to look at copies of each other’s credit reports. You can obtain copies of your reports from each of the three primary reporting agencies once a year at no cost through Annual Credit Report.

Getting New Credit After You’re Married

After you’re married, both of your credit reports will reflect any joint credit you take out. You’ll see entries for:

  • accounts that you open jointly
  • accounts on which you’re listed as cosigner, and
  • accounts on which one spouse is either a joint account holder or an authorized user.

When you and your spouse apply together for a new loan or credit card, to rent an apartment, or purchase an insurance policy, the lender or broker will likely review both of your credit histories. Your good credit may not be enough to overcome the negative effect of your spouse's poor credit history.

Instead of relying on both credit histories, you could choose to apply under one name only, but this decision carries some risk.

  • It might be difficult to qualify for a larger loan, like a mortgage, based only one income and credit history.
  • You’ll be taking on the entire liability for the debt. If you default, your credit will suffer, but your spouse’s credit will not be affected.
  • If the loan requires collateral, such as when you purchase a new car, your spouse could make off with the collateral leaving you to make payments with nothing to show for it.

Adding a Spouse to Your Account

If your creditor is agreeable, you can add your spouse to a credit line you already have. There are two ways to do this.

  • Authorized user. You remain solely responsible for the account, but your spouse has the right to use available credit
  • Cosigner or joint account holder: You and your spouse are both liable for the account.

Adding a spouse to your account as an authorized user will cause the account to appear on both credit reports, but the spouse might not benefit if the account has a positive history. By contrast, the account will show up on both reports If you add a spouse as a joint holder, and will impact both credit scores. However, you should be aware that if negative history appears on either report, taking these steps might affect the better credit score negatively.

Also, you’ll have an easier time removing a spouse who is an authorized user rather than a jointly liable holder. Credit grantors don’t like removing a joint holder because it removes one avenue they could use to collect the debt if necessary. If you and your spouse later divorce and divide the debt in your property settlement, your creditors are not a party to your agreement and aren’t required to respect it. If a spouse defaults on the debt even after agreeing to pay it, the creditors will look to you. If your joint debt is likely to cause you difficulties, you might consult with a consumer bankruptcy attorney to determine if it’s in your best interest to eliminate that debt before a divorce.

Maintaining Your Own Accounts

Positive credit histories on older established accounts can increase your credit score. So it’s a good idea to keep some of your old credit accounts open and separate. Plus, you can keep the available credit for when you really need it. It can also help you recover if you separate or divorce.

Help Your Spouse Improve Credit

Improving a credit record isn’t impossible, but it takes time and discipline. Here are suggestions to help your spouse increase a credit score.

  • Set financial goals together. Encourage your spouse to budget and exercise discipline.
  • Review your credit reports annually to celebrate progress and head off any problems due to errors.
  • Add your spouse to your existing accounts, if appropriate.
  • Help pay down your spouse’s accounts, especially those with higher balances or higher interest rates.
  • Take over management of the family finances if your spouse continues to exhibit money management issues.
  • Consider visiting with a credit counselor or consumer bankruptcy attorney if your spouse’s financial outlook seems overwhelming.

Consider Filing for Bankruptcy

In some cases, it’s simpler to file for bankruptcy than to take the time necessary to improve a credit score. It’s a good idea to make this determination before marriage when possible because it’s often easier to qualify for a Chapter 7 bankruptcy with one income rather than two. An easy way to get a financial assessment is by speaking with a local bankruptcy attorney.

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