The day you got married was great. Now you are looking forward to a very rosy future with your new spouse. However, something someone said at the reception on your big day has stayed in the back of your mind. Uncle Fred said your new spouse’s bad credit was really going to hurt you.
But is that really true? Can marrying someone with a poor credit history really affect you? And isn’t there something a spouse with good credit can do to help improve the bad credit score their beloved has?
How You Credit Changes When You Marry
The fact is that when you marry it really does not affect your personal credit report or credit score at all. Credit bureaus do not suddenly lump a married couple’s credit reports together and in fact, the spouse’s credit is not mentioned at all. That means that in terms of your personal credit reputation, marrying someone with a bad credit record cannot really harm you at all.
Note: Contrary to what popular myth says when a woman marries and legally changes her name to that of her new husband that does not erase her past credit history. Credit histories are built off dates of birth and NI numbers, along with other factors, not names so your credit history, good or bad, will stay with you after a marriage-related name change.
When it comes to getting a large loan like a mortgage then Uncle Fred was not completely incorrect. If you and your spouse want to take out a mortgage in both your names then that means that both your credit scores will be used as a part of the decision making process. Even if you have good credit, if your spouse has poor credit then the chances that you will be approved for the loan you want decrease significantly.
Helping Your Spouse Improve Their Credit
What Uncle Fred could have done, rather than spook you out on your big day, was suggest that you help your partner his rebuild their credit if your credit is good. A spouse with a good credit rating can do a number of things to help a partner with poor credit. They do have to be careful though as in doing so they may damage their own.
Why Does Your Spouse Have Bad Credit?
Before a spouse with good credit begins looking at ways to help their husband or wife rebuild their bad credit, they really do need to know why their spouse has bad credit in the first place. If the bad credit comes from sheer financial irresponsibility rather than a circumstance like a divorce or a temporary period of unemployment, situations that cannot be prevented, then you may want to proceed with caution when attaching your good credit to their bad reputation if they are likely to continue to make the same mistakes.
Making a Debt Payoff Plan
If your spouse still has debts to pay off that will need to be dealt with before they can even think off rebuilding their credit. As a new joint household, reasonable debt payments should be figured into a budget. This can be a sticky issue, especially if the debts are related to a previous relationship, but paying off debt really does have to be addressed before you can begin to help your spouse improve their financial reputation.
Minimizing the Risk of Helping Your Spouse Rebuild Credit
Rather than taking the risk of cosigning for a new credit card for a spouse with a less than stellar past in terms of financial responsibility, you could consider adding them as an authorized user on a credit card account you already have.
Activity on the credit card – including payment history – will then be included on their credit report as well as yours and because you are a responsible cardholder a good payment track record showing up on their report should help significantly increase their score in a fairly short period of time. If they are also clearing up outstanding debts at the same time as well the improvement will be noticeable even more quickly.
Letting Your Spouse Start Going it Alone
Once their credit rating has improved enough to be considered for a basic credit card on their own you should encourage your spouse to apply for a new credit card that they hold alone. The amount of credit a person has available to them can increase their score so if you are rebuilding a spouse’s credit in the hope that you will be able to get a joint mortgage or other large loan at some point then the extra line of credit will help.
You may just want to keep an eye on the way your spouse is using the card to make sure that the good financial habits you have been sharing have rubbed off on them!
What if Both Spouses Have Bad Credit?
If you both have poor credit then you can rebuild credit together. It will take longer and may be more expensive but with careful planning, it can be done.
First of all, you need to come up with a workable plan to get everyone’s debt paid off. Once that is in place apply for a secured credit card.
The one thing that can make getting a secured credit card hard is actually coming up with the spare lump sum of cash needed to get one, so if money is tight you could consider applying for a very small short-term loan instead, which if paid off properly will build your credit too. As your credit scores improve you can begin thinking about taking out a few more unsecured lines of credit to boost your scores even higher.
Having a spouse with bad credit does not have to mean you suffer too. Bad credit can be repaired, it just takes time, planning and patience. Like a successful marriage actually, but that’s another story…