Marriage & Credit: Dos and Don’ts Before Saying I Do

Congratulations! You’ve decided to take the plunge. As you and your soon-to-be spouse plan your future together, you undoubtedly have a lot to be excited about and many changes to prepare for. One of the biggest changes you encounter could be how you choose to handle your finances as a married couple. And your credit histories may play a big role in that decision.

There are many misconceptions floating around about the impact getting married has on a person’s credit. Let’s start by answering some of the most common questions to set the record straight. Then we’ll explore why your future spouse’s credit history is important and what you can do to improve both of your odds of financial success.

Question #1: Will our credit histories be combined when we get married?

You and your fiancé have separate credit histories before exchanging nuptials, and that won’t change after you tie the knot. Your spouse’s accounts won’t appear on your credit report, and your accounts won’t appear on your spouse’s. Which means your spouse’s credit history won’t impact your credit score and vice versa.

Question #2: Will any joint accounts we open together impact my credit?

If you and your spouse apply for credit together, and you’re approved, the account will show up on both of your credit reports. On a joint account, you are both equally responsible for repaying the debt. The payment history for joint accounts impacts both of your credit scores, so it’s important to make consistent on-time payments.  

Question #3: Why does my future spouse’s credit history matter?

Credit history is one of the critical factors considered by lenders in determining whether or not you qualify for a credit card, loan, or line of credit. Although your histories don’t merge when you get married, if you and your spouse apply jointly for credit, say, for a mortgage, financial institutions will look at both of your credit reports in making lending decisions.

People with good credit are more likely to be approved for loans and qualify for lower interest rates than those with poor credit. If your spouse has an unflattering credit history that adversely affects their credit score, it may be difficult to qualify for a loan or secure more favorable terms. 

This may not be a problem if you make enough money and your credit score is high enough to qualify on your own. But if you need your spouse’s income to qualify, particularly for larger purchases like a house, it could definitely affect you.

Tips for Financial Success

Discussing financial habits may not seem like the most romantic conversation to have when planning a wedding, but it’s an important one. If you and your spouse aren’t on the same page financially, it can cause problems later. In fact, 21% of respondents in MagnifyMoney’s 2017 Divorce and Debt Survey cite money as the cause of their divorce.

With so much at stake, it’s a good idea to have a money conversation or two before saying, “I do.” That way, you’ll know what you’re getting yourself into before it’s too late.

Here are a few tips to get you started with this potentially awkward conversation:

• Review your credit reports together. Looking at your credit histories can open the door to an honest conversation about both of your financial strengths and weaknesses.

• Prioritize. Do you want to buy a house, start a family, or travel before settling down? Your financial goals will likely evolve over time, but discussing what’s important to you now can help put you on the right path. After you decide which goals you want to focus on as a couple, then develop an actionable plan to help you achieve them.

• Set a budget for the wedding and honeymoon. Designer dresses and white-sand beaches in exotic locations can be tough to resist. But spending more than you can afford is a surefire way to put your financial well-being at risk. Instead, decide on a budget together and stick to it. You’ll be glad you did when life returns to normal and you’re still on track to achieve your fiscal goals.

• Consider a rewards credit card. Using a rewards card for wedding expenses can be a great way to help pay for the wedding and/or honeymoon. But be sure to pay off your balance every month or you could be negating any rewards gained with interest charges and other fees.

Choosing someone to spend the rest of your life with is a big decision that will impact many aspects of your life, including your finances. How you choose to handle money after you get hitched is ultimately up to you and your spouse. But it’s important to understand your future spouse’s financial habits before you walk down the aisle, so you’re not neglecting their past and present while preparing for the future.