SAN JOSE, California, July 13, 2021 / PRNewswire / – Getting married can be one of the best decisions you can make in your life. In many cases, getting married also means sharing financial accounts and bills. If you’re concerned about the impact of your credit mix on your FICO® Scores, read on for some common marriage and credit myths, and the facts you need to know.
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Myth: Your credit reports merge with your spouse
As the saying goes, love conquers everything, and that can include a less than stellar credit history. But should you be concerned about the impact of your partner’s credit history on yours when you get married?
In short, no.
Credit reports are created and stored at the individual level, not at the household level. In today’s world, most people have a credit history with some level of credit established in their name prior to getting married. While you can choose to combine your finances in other ways, your credit history remains yours, and so does your partner. In other words, if your credit history or your spouse’s credit history requires work, no one will notice when looking at the other’s credit reports.
The only time you’ll find the same information on both of your credit reports is if you open a joint credit account.
While your credit reports will remain separate, it’s important to know that when you apply for a joint loan such as a mortgage, lenders will be looking at the credit reports and scores of you and your spouse. Mortgage lenders will look at the average FICO score of the three credit bureaus for you and your spouse. The lower of these two scores will be used in credit decisions.
Myth: Changing your name gives you a new credit history
If you are considering changing your last name – or if you have already done so – you may be concerned that your credit history will be wiped out because it was linked to your old last name. Credit bureaus have a logic that links information together to maintain a single credit report on someone who has changed their name. It may take a few months to link the files, so it’s a good practice to get a copy of your credit report after you’ve changed your name and verify that the information is correct.
When you apply for credit in the future or change your personal information on your credit accounts, the credit reporting agencies will add your new name to a list of name variations on your credit report.
This list can also include different spellings of your name, a short name – such as Bill instead of William – and other variations that have been reported by creditors through credit applications and account information.
Myth: Your marital status affects your credit score
Your marital status can affect some aspect of your financial life. For example, married people tend to qualify for lower auto insurance rates because they are statistically less likely to file a claim.
But when it comes to calculating your FICO® Scores, your marital status doesn’t factor into the equation.
Myth: you have to ask for joint accounts
Although some married couples choose to apply for joint credit accounts, it is not necessary to do so. While this might make sense with a mortgage, for example, it’s actually good practice to have some degree of credit in your name just as collateral if you divorce or lose your spouse in the future.
The important thing is that you communicate with your spouse about money matters and make a decision based on what’s best for the relationship.
Myth: being added as an authorized user means you’re blocked
If your spouse adds you as an authorized user on their credit card, the account history will be added to your credit report. Also, if they miss a payment or accumulate a large balance, it could affect your FICO.® Negative scores with theirs.
But unlike a situation where you have a joint account, you are not required to make payments if you are an authorized user. And once you remove your name from the account, you won’t have any lingering negative impacts (although read on for the next myth – you could be liable for debts your spouse owed if you divorce).
To be removed from an account as an authorized user, you can simply contact the credit card company and ask them to remove you from the account. Once this happens, the account, along with the negative information associated with it, will disappear from your credit reports.
If you’ve asked the creditor to remove you from the account, but they still report the account information to the credit bureaus, you can file a dispute to have the business line removed from your credit reports.
Myth: You’re off the hook if you divorce
Even if you never open a joint account with your spouse, you may still have to pay off the debts they incurred during the marriage.
This is especially true in communal property states, where assets and debts accumulated by one of the spouses during the marriage are considered to be owned and owed by both spouses.
In other states, debt incurred by a single spouse is generally considered the responsibility of that spouse, unless it is family necessities such as food, shelter, and education expenses.
If you are considering a divorce, consult a lawyer licensed in your state to understand how your assets and debts will be divided.
The bottom line
Getting married can be an exciting time in your life, and the merging of finances is incredibly common. But when it comes to your credit, it’s important to know both the myths and the facts about whether or not your new relationship will impact your credit history and your FICO.® Scores.
Above all, it’s crucial that you and your spouse communicate about your money to make sure you’re on the same page with your financial goals and how you plan to manage your income, expenses, and debt.
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