Does Marriage Affect Credit Scores?
The short answer is no. Tying the knot does not affect your credit score or credit report. The credit bureaus don’t even track marital status, so there’s no such thing as a marriage credit score. Your credit reports and credit histories remain separate, and marriage itself does not directly impact your credit—this is sometimes referred to as the “married effect.”
Your credit history is tied to your Social Security number and is unique to you. Credit bureaus do not record marital status on individual credit reports. Your spouse’s credit becomes relevant to you only when you engage in joint financing, such as a shared mortgage or car loan.
Each person maintains an individual credit score and individual credit reports, and there is no such thing as a couple’s credit report. When a married couple decides to apply jointly or take out credit jointly, the creditor will pull both credit reports whenever they apply for joint financing.
Approval, funding, and interest rate decisions are made based on your credit scores and combined household income. If one spouse has a low credit score, it could mean higher interest rates, lower purchasing power, and less favorable terms. A very low score could even cause a denial.
Once approved for joint financing, any credit activity on joint credit accounts is recorded in your unique credit reports. A missed payment or default on a joint account will negatively affect your credit history and scores.
Will my Spouse’s Bad Credit bring my Credit Score down?
No, marrying someone with poor credit won’t lower your credit score because the credit reports are separate, and your spouse’s credit does not directly impact your score. However, a spouse’s bad credit can affect joint financial decisions, such as applying for loans or credit cards together. Lenders may consider both spouses’ credit scores when evaluating joint applications, which can impact approval and loan terms.
Debt assumed before marriage is typically the responsibility of only one spouse. In states with community property status, both spouses may share responsibility for debts incurred during the marriage, regardless of whose name is on the account. Even if only one spouse is listed on a debt, the other spouse may be responsible depending on state laws, especially in community property states.
What can I do to help my Spouse’s Bad Credit?
While your spouse’s poor credit won’t affect your credit score, it does impact your joint financing options. Managing personal finances together is crucial when addressing credit issues, as it helps both partners make informed decisions and monitor their credit reports.
You might also want to help your spouse repair their damaged credit for their own financing options. Working together for a better financial future can help with cohesive planning.
Here are some strategies to help with your spouse’s bad credit before applying for a joint credit account:
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Review and pay off any outstanding debts or collection accounts listed on your spouse’s credit report to improve their credit standing.
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The goal of credit repair is to achieve a good credit score, which is essential when borrowing money for major purchases or financial opportunities.
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When considering account sharing, understand the difference between adding your spouse as an authorized user to your account (spouse’s account) and opening a shared account, as both can impact individual credit scores and financial responsibilities.
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Lenders will consider both spouses’ incomes and credit scores for joint loan applications to determine approval and loan terms.
Understand the Problem
The first step is to understand why their credit score is so low. You each get a free yearly credit report from all three major credit bureaus (Experian, Equifax, and TransUnion) at www.AnnualCreditReport.com.
Pull your separate credit reports and review both partners’ credit scores and credit records to identify specific issues. Examples of negative marks on the credit report that drag down credit scores include missed or late payments, carrying too much credit card debt, defaults, charge-offs, foreclosures, and bankruptcies.
Devise a Plan of Action
Once you know the issues affecting your partner’s credit score, you can create a plan to improve it. For example, if your spouse’s credit utilization is too high, you can pay down the debt and reduce credit card balances.
If it’s a foreclosure or bankruptcy, you must continue making on-time payments while keeping credit utilization low. Over time, the effects of the foreclosure will lessen until it’s eventually removed altogether after seven years. Meanwhile, positive credit activity will improve your spouse’s credit score.
Strategic Account Sharing
If you have good credit, you could consider adding your spouse as an authorized user on one of your credit card accounts. Using a credit card account with a high shared credit line and a low balance would be best.
The shared credit line will be added to your partner’s credit profile, decreasing their credit utilization ratio. Positive payment history on the shared account will also be added to your spouse’s payment history, which can affect both partners’ credit scores and financial responsibilities.
You can also consider opening joint credit cards or accounts with your spouse. With joint credit cards, both partners share responsibility for the account, and the card issuer’s policies determine how these shared accounts are managed.
The credit line and payment history are added to your and your spouse’s credit reports, so managing the account responsibly is crucial. Ensure you keep credit usage low on the card and never miss a payment on joint credit card accounts, as this will impact both partners’ credit.
Track Progress
Once you implement your plan, pull the credit report every few months to track progress on repairing the credit score. Based on the new credit report updates, you can adjust the plan.
Frequently Asked Questions
Here are the most common questions about marrying someone with poor credit.
Do married couples share debt?
Yes, married couples may share debt depending on how the debt is acquired and the laws in their state. In community property states, debts taken on during the marriage are generally considered joint, meaning both spouses are responsible. Debt assumed before marriage remains the sole responsibility of the individual spouse.
In community property states, both spouses are equally responsible for debts acquired during the marriage. In other states, only debts in both names or co-signed by both partners are shared. Understanding how you and your spouse may share debt before taking on new financial obligations together is essential.
Are we both responsible for the debt if we open joint accounts?
Yes, if you open a joint account or take out a loan together, you and your spouse are equally responsible for the debt. Lenders will consider both your credit histories and incomes when making decisions, and any missed payments can affect both your credit scores.
What happens to my Credit History if I change my name?
Your credit history is tied to your Social Security, so changing your name doesn’t change your credit history. The name change is recorded in your credit report, but only as identifiable information. It does not affect your credit score or creditworthiness.
Does Marriage Merge Credit Reports?
While it’s a common myth, getting married does not merge your credit reports. Each individual has a unique credit profile that can’t merge with another person’s credit report.
If you have a shared loan or credit card, any activity for that credit account is recorded in your credit reports. But any loans or credit cards in your name only stay on your credit report and don’t affect your spouse. Any credit cards or loans in your spouse’s name only remain on their credit report and won’t affect yours.
How does my Spouse’s Bad Credit affect financing?
Getting married to someone with bad credit only impacts joint accounts, but that’s common in marriage. For example, when you and your spouse jointly apply for a mortgage, refinance, or take out a car loan, both of your credit scores are considered. Taking out credit jointly means both partners are responsible for the debt, and any missed payments can affect both credit reports and financial obligations.
When you and your spouse apply for credit, the lender pulls both of your credit reports. Lenders consider both spouses’ credit scores when underwriting a loan. Some lenders use what’s called the lowest middle score. That means they take the middle scores for each person and use the lowest one as the determining score for the loan.
If one partner has a spouse’s bad credit, you can expect higher interest rates and fees, less favorable terms, or the loan being denied. If your income is enough to handle payments, you may want to consider putting the loan in just your name.
Business Loans with Bad Credit
If you’re in business together, having a spouse with bad credit could also impact your business loan opportunities. Commercial lenders typically pull credit reports for every owner with a 20% or greater ownership stake.
That could be an issue for married couples who are also business partners or co-owners of a business. While bad credit business loan options exist, they usually have lower borrowing ranges, higher interest rates, increased fees, and shorter terms.
Sometimes, you can use business loans for bad credit as bridge financing. Since most bad credit business loan lenders are alternative financing facilitators, you get a quick and convenient online application with a fast turnaround on approval and funding.
You and your business partner/spouse can use the short-term loan funds to keep the business running. As you repay the loan and build credit, you can qualify for more advantageous business loans.
Bad Credit Business Loans Pros & Cons
Pros:
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Provides funding when you can’t qualify for traditional business loans.
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Usually has a quick and easy online application.
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Fast approval and funding times.
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Multiple types of loans are available.
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It could potentially help build good credit with timely payments.
Cons:
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Higher interest rates than conventional business loans.
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Might include additional fees.
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Might require collateral, a down payment, or a personal guarantee.
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Usually short-term funding.
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Lower borrowing amounts.
Marrying Someone with Bad Credit – Final Thoughts
Fortunately, when you get married, you marry the person, not their credit score. The credit bureaus will always keep your credit report separate from your spouse’s, as all credit reports are unique to the individual, regardless of marital status. Credit reports don’t even reflect marital status. Name changes get recorded but don’t impact credit scores.
The only time a spouse’s bad credit comes into play is when applying for joint financing, such as a home mortgage. If you know your spouse has bad credit and you plan to apply for joint loans or credit cards, take some time to help your spouse improve their credit.
Improving credit requires patience and discipline. If credit utilization is above 30%, you must pay down debts. The most reliable way to improve credit is to build a positive payment history.
Contact us if you have more questions or want to apply for a small business loan. Our funding experts can help you find the best loans for your credit score.
