Dealing With A Spouse Who Has Less Than Ideal Credit History
- May 13, 2015
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Marriage is a wonderful thing and a great time in ones life. Two become one and embark on a journey in life facing everything together. Yet marriage can impact your credit and it may not be so eloquent as marriage itself is. Things from your spouses past may come to haunt you both. The good news is that any credit damage can be repaired and the spouse with the weaker credit can make use of the spouse with the stronger credit to help repair their damaged credit.
Creditors will view you both together, yet they will take into account the spouse with the weaker credit over the spouse with the stronger credit. They see it as the anchor that weighs down the good spouses credit. If you are the spouse with the poorer credit you might think that by applying for credit together that your poor credit will not matter due to your spouses good credit but your poor credit will still weigh down the application.
If you go for a mortgage together the lender will take into account whoever has the lower credit score and base the loan around that. Prior to the credit crisis of 2008 you could get a loan based off of just one spouses credit but still include the other spouse on the mortgage. This no longer holds true. So if you want to apply for a mortgage together you will want to work on improving the credit score of the spouse with the lowest credit score.
You can start to repair the spouses credit with the lowest credit score by including them on the stronger credit spouses accounts as a joint account holder. You do not want your spouse to be merely an authorized user as this does little for that spouses credit score, whereas a joint user it builds their credit equally along with you own. The reason why a joint account holder is the better choice is because the other spouse is equally responsible for any debt that is incurred on that account so it counts towards that spouses credit score. Any joint accounts will appear on both of your credit reports. This is known as piggybacking on one another’s credit. You do need to make sure the account reports joint users to the credit reporting agencies however, as not all accounts do. You can also apply for credit cards and loans together, the APR will suffer from the spouses with the lower credit score, but over time this will boost the credit score of the spouse with the poor credit.
Bad credit with on party in marriage can severely hamper your financial life together. Did you know one of the most common causes of divorce is financial stress? If you want your marriage to have the best chances at success you will both need to tackle credit issues together hand in hand as true partners, with understanding. The moment you said or say “I do” at the later you inherit each others finances, and that includes both of your credit scores. Poor credit can prevent you both from obtaining a mortgage for example or even if you do get approved for a mortgage a less than ideal interest rate on your loan. Other factors include credit checks for jobs and even renting an apartment. The sooner you both get your credit scores in sync the better off you both will be financially.