How your partner can ruin your credit standing
You cannot deny the fact that financial distress can ruin your happy married life. So, there's no harm in checking your spouse's credit report from time to time and help him/her to fix the negative items. This is because your partner's financial habits can also ruin your credit, which in turn, can affect your financial future. Here are a few tips to keep financial misunderstanding away from your married life.
Check out each other's credit reports
When you decide to get married, you should check each other's credit reports to know about each other's financial situations. You should know high debt-to-income ratio can lower the credit score. So, help your spouse to pay down the outstanding debts as early as possible. If one is carrying high debt, sit down and make a debt relief plan by following which you can solve your debt problems. You should also continue checking both of your credit reports at regular intervals so that you're aware of any negative items, which you need to fix or dispute. It is better if any of you take the initiative to check credit reports at regular intervals and then both of you discuss and take necessary actions required.
Help your partner to build a credit history
It is quite important to have a credit history in order to obtain loans. So, help your partner to build a credit history if he/she doesn't have one, otherwise it may affect your credit score if you decide to combine accounts. However, as this process takes a while so you can consider combining your accounts a little later till a satisfactory credit history is built.
Do not use the entire credit available to you
Always make sure that you and your partner do not use credit cards for each and every purchase. The idea is you should not use your entire credit limit as otherwise it may be harmful for your credit score. It is better to limit your usage to 30% of your available credit limit. And, always pay your bills at every billing cycle and do not carry forward your balances. It will help you have a great score as well as you can save dollars which you otherwise need to make as interest payments.
Set reminder for bill payments
Do you know that one single late payment can lower your credit score by about 100 points? Yes, it is true. So, never pay your bills late. Set reminder in mobile phones 2 days before the due date for both of your bill payments and pay them on time. The best way to remember due dates is to paste the bill payment dates on your refrigerator so that every day you can have a look at them.
By following these tips, you can prevent your partner from ruining your credit standing and also helping him/her to have a good credit report. This will help you take out loans at favorable terms and conditions along with lowering your insurance premiums. So, in short, it can be said that a good credit score can help you enjoy a better lifestyle along with enjoying a happy stress life with your family.
Why a credit check is important in marriage
While marriage can be exciting, it can also be intimidating for a number of reasons and one of them is the topic of credit reports and scores. The most common example is when one partner has a not-so-perfect credit score due to unpaid or overdue credit card balances, missing student loan payments or even worse, bankruptcy. These financial liabilities can leave the other spouse or partner worrying whether this could affect a carefully and well-maintained credit score and credit report.
Here are some things you should know about your credit score, dating and marriage.
Individual Credit Scores
First things first, getting married will not have a direct effect on each of your credit scores. You are not responsible for your spouse’s debts created prior to your marriage. When dating and especially if considering marriage, you should know your partner’s credit habits as his or her credit score may affect dating. Not in the sense that their score can affect your score, but it may raise some red flags if the poor credit is due to negligence. If on the other hand the bad credit score is because of extenuating circumstances, it may have no effect on your relationship at all.
It is often a good idea for both partners continue to keep separate accounts, though many couples opt for one joint account. Your credit scores will not be combined because credit reports are linked to an individual’s SS number. When you get married, your credit scores will not be averaged. Therefore, couples, married or not, shouldn’t be concerned about credit scores affecting dating or marriage.
The act of opening a joint account which will be held in both of your names will not tarnish your good credit score even if the account appears on your credit reports unless it is mishandled. If you open up a new credit card and list your spouse with bad credit as an authorized user, be mindful of how he or she uses the card. If he or she uses it responsibly and pays the balance on time and in full, this will add more positive history to your credit reports and may benefit both of your credit scores. On the other hand, if your spouse continues to miss payments or spends up to the credit card limit, then the opposite could happen. His or her financial liabilities will also be your liabilities which may really hurt your good credit score.
Spouses should continue keeping their individual credit cards and other financial accounts even after they get married—especially if the other spouse has really poor credit. Having separate accounts will help you maintain a good credit score provided that you are still managing yours in the way you did before you got married. Furthermore, other reasons why it is important to keep an active account of your own is because, having recent items in your credit report and a good credit score can help you individually qualify for a loan, in case you need one in the future and can increase your spouse’s chance of securing one in the event that he or she needs a co-signer.
If you and your partner both work and decide to take out a mortgage, usually, you would have to use both of your names so that your incomes can be combined and increase your chances of getting approved. However, when your partner has poor credit, this will lessen your chances and may even increase the interest rate. Therefore, it is often recommended that the partner with the better credit score should be the only one to apply for the mortgage. The only drawback is, since your partner is not listed on the mortgage loan; paying the monthly payments on time and in full, will not help the credit score and credit history of your partner.
As mentioned earlier, marriage does not have a direct effect on credit scores. However, it is still important for both spouses to discuss their credit scores so they can arrive at a good financial plan for their future. If you have bad credit, you can benefit greatly if you let your spouse with good credit habits manage a jointly held account. His or her actions would help boost your score and improve your credit history. Once the both of you have good credit scores, you will be able to secure better terms and interest rates on loans and mortgages.
It is important to look at your credit reports before you get married as it is best for both partners to disclose their finances to each other during this time. The reason this step is important is because after marriage, there will be a lot of major adjustments, of the biggest of which is often money. When you and your partner know each other’s debts and financial liabilities, the both of you will be able to come up with a good plan for your financial future together. Aside from that, disclosing everything to one another builds trust and will enable you to have a partner who may help you overcome your past financial setbacks.