26 Aug Did You Say “I Do?” Did You Just Marry Into Bad Credit?
Credit Scores and Marriage
The “ties that bind” don’t combine your credit histories when you marry. Every person’s credit score is tied to his/her Social Security Number, so it doesn’t make a difference if you change your name. Your credit score also doesn’t change when you marry (even if you live in a community property state). Now we aren’t saying that you should run a credit check before you get engaged, but just be aware of some of the ways marrying the love of you life might impact your credit and ability to obtain loans.
You affect each other’s creditworthiness if you apply together for a mortgage
Let’s assume you have a low credit score because of past hardships and prior to meeting your future partner, you had no real thoughts of obtaining a mortgage because buying a house just wasn’t in the cards for you. You meet your spouse and the two of you decide that the logical next step is to buy a house and build a home together. Your partner has good credit and a much higher credit score.
Fast forward, you’ve found your dream home and you are ready to go apply for a loan together. You need to use your combined income to be eligible for the home’s in your desired price range. Your score is steady at a 540 (way to low to get a loan on your own), and let’s say your spouse has a score of 750. Add 540 to 750, and divide by 2 – the average is 645. You’re probably thinking this is great for me – I’m now loan eligible! Your spouse is probably shaking their head and thinking about how much more you two will be paying monthly on this loan than had he
attempted to obtain it on his own!
At the time of writing, your spouse’s score of 750 would result in a typical interest rate of 3.581% on a 30-year fixed mortgage.
Your combined score of 645 would receive interest rate offers of approximately 4.402%. That doesn’t sound like much of a difference, right?
Wrong. Over 30 years, the higher interest rate would cause you to pay $34,056.00 more on your joint mortgage than your spouse would pay if he or she applied alone.
Joint credit cards affect both partners’ credit scores
Joint credit accounts make both individuals responsible for the debt. If you fall behind on payments, both of your credit scores will drop. If one person is just an authorized user, they don’t have to pay the debt, but the account will affect their credit score. (In the case of divorce or separation, remember to remove your ex as an authorized user from any shared accounts.)
On the other hand, having a joint account in good standing will raise both credit scores over time.
Don’t let a bad credit score drag you down
You can begin building a better credit history and raise your credit score today. You don’t need to worry about dragging down anyone else’s credit. Before you pop “the question” let’s get your credit to a respectable level!
Call one of our credit consultants today so we can discuss options for helping to improve your credit profile! (844) 967-3724