Getting married impacts almost all areas of your life, but when it comes to credit scores, the numbers are yours and yours alone.
Whether you’re hoping marriage will improve your credit score or worried your new spouse’s credit will knock yours down, here’s what you need to know about the relationship between getting married and credit.
Does Your Credit Merge When You Get Married?
As couples plan their wedding, they often wonder, how does getting married affect your credit? Like employment, income and age, marital status isn’t one of the factors that goes into calculating your credit scores. This means the act of getting married won’t boost or lower your score in any way.
Once you officially tie the knot, your credit doesn’t technically merge with your spouse’s credit. Each of you will continue to own your own credit scores, and your payment history, credit mix, credit age, credit utilization, and number of inquiries will remain specific to your identity. The same goes for your spouse.
However, whenever you apply jointly for credit, whether it’s an auto loan, personal loan, home improvement loan or mortgage, both of your credit scores will be considered in the approval or denial process.
In addition, both of you are responsible for paying the debt back.
Name Changes and Credit Reports
Changing your last name because of marriage won’t increase or lower your credit score because your credit records aren’t tied to what people call you. They’re tied to your social security number.
So when you get married and change your last name, your new name, along with the old one, will be listed on your credit reports. And while you may need to re-monogram your towels, a name change doesn’t mean you’re starting your credit history over again.
How Your Partner’s Credit Affects You
While your spouse’s credit history doesn’t impact your scores, if he or she has bad credit, it could impact the terms and interest rate of a new loan or credit card if apply jointly, for better or for worse.
For example, let’s say you need to buy a family car. If you apply for the loan in your name, and you have great credit, you’ll be quoted a low interest rate on the loan. However, if you apply jointly and your spouse has bad credit, the interest rate can quickly become steeper.
While the spouse with the bad credit can improve his or her scores with new debt that’s responsibly repaid, the terms of the loan may be expensive to your new household.
Having a spouse with bad credit can also mean you have the burden of applying for all new debt on your own or for obtaining new services, such as utilities or insurance.
Vow to Work Together
Like a successful marriage, credit can get even better over time.
Making payments before they’re due, steadily lowering debt and obtaining a smart credit mix are all factors that impact credit scores. With patience and dedication, you can move into the next life chapter with the happiness that comes from greater financial well-being.