Managing credit well as a couple will help ensure that your new family has access to credit when you need it, under the best possible terms. Here are some tips to keep in mind as you start down the road to healthy credit in your married life:
Discuss all aspects of your financial history with your spouse. The first step to living credit smart as a couple is to go over all of your financial records, including your credit reports, savings, investments, debts, credit accounts, salaries, etc. Knowing where you both stand and reviewing your credit reports together can help prevent any unexpected issues when you merge your finances, set your financial goals or plan for major purchases. To get started, visit CreditReport.com.
Talk about financial habits that may not be apparent in a credit report. Beyond knowing what’s in your partner’s credit history, it is also important to discuss your financial preferences or routines. For instance, are you a saver or a spender? Do you pay your credit charges in full or revolve? What do you consider necessities and luxuries? Will you manage your finances together or will one person be in charge of paying the bills? Will you maintain separate checking accounts and, if so, what expenses will be paid from each? Will you both work or will you rely on one person’s income? What costs will you incur as a couple that you were not previously responsible for? What financial goals do you want to achieve together? What are your attitudes toward major investments including the decision to have children, purchase a home or car, or finance an education?
Remember that you will always have your own individual credit history, but your individual financial behaviors also affect your partner. After you marry, your credit report is not combined with your spouse’s. Each of you will maintain your own individual credit histories, which will include only the accounts that are in your name. However, the most important thing to understand about managing credit as a couple is that your personal choices can affect your ability to achieve the financial goals you set together.
You are both responsible for debt incurred on a joint account. If you decide to consolidate your financial accounts with your spouse, joint accounts will be reported on each of your individual credit reports. This means that both of you are responsible for the debt incurred on those accounts, and a missed payment will impact both of your credit reports. And, in joint property states, you can be liable for debt even if your name is not on the account. You may want to consider keeping at least one of your individual accounts open. Keeping an account in your name will help ensure easy access to credit in case of an emergency. Furthermore, in the unfortunate event of a divorce, an established account in your name will help you rebuild your individual credit history.
Lenders will consider both of your credit histories when you make major purchases. When you apply for credit jointly, especially to make a major purchase, lenders will often consider both of your financial standings so it is especially important that you both maintain positive credit. Remember that even if you miss a payment on one of your individual accounts, it could impact your ability to open joint accounts together in the future when a lender is deciding whether or not you qualify for a loan as a couple.
Have a monthly financial date night to review your balances and your progress in meeting your plans. Open communication about your finances is critical to the overall success of your relationship and your marriage.