6 myths about marriage and credit

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SAN JOSE, California., July 13, 2021 /PRNewswire/ — Making the decision can be one of the best decisions you’ll make in your life. In many cases, getting married also means sharing financial bills and bills. If you’re concerned about how mixing your credits could affect your FICO® Scores, read on for some common myths about marriage and credit, and the facts you need to know.

For more information on loans and credits, visit the myFICO blog at: https://www.myfico.com/credit-education/blog

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Myth: Your Credit Reports Are Merged With Your Spouse
As the adage goes, love conquers all, and that can include a less-than-stellar credit history. But should you worry about your spouse’s credit history affecting yours when you get married?

In short, no.

Credit reports are created and stored at the individual level – not at the household level. In today’s world, most people have a credit record with some credit level in their name before getting married. While you can choose to combine your finances in other ways, your credit history remains yours alone, and the same goes for your spouse. In other words, if your credit history or your spouse’s credit history needs some work, no one will notice by looking at the other person’s credit reports.

The only time you will find the same information on both credit reports is if you open a joint credit account.

While your credit reports will remain separate, it’s important to know that when you apply for a joint loan, such as a mortgage, lenders will review the credit reports and scores for both you and your spouse. Mortgage lenders look at the middle FICO score of the three credit bureaus for both you and your spouse. The lower of those two scores will be used in credit decisions.

Myth: Changing your name gives you a new credit history
If you’re planning to change your last name — or you already have one — you may be concerned that your past credit history will be erased because it was associated with your previous last name. The credit reference agencies have logic that links information together to maintain one credit file on a person with a name change. It can take a few months to link files, so it’s good practice to get a copy of your credit report after you change your name and check that the information is correct.

In the future, when you apply for credit or change your personal information on your credit accounts, the credit reporting agencies will add your new name to a list of name variations on your credit report.

This list may also include different spellings of your name, an abbreviated name — such as Bill instead of William — and other variations reported by creditors through credit applications and account information.

Myth: Your marital status affects your credit score
Your marital status can affect certain aspects of your financial life. For example, married people tend to qualify for lower auto insurance rates because they are statistically less likely to file a claim.

But when it comes to calculating your FICO® Scores, your marital status plays no part in the equation.

Myth: You Need to Apply for Joint Accounts
While some couples choose to apply for joint credit accounts, this is not necessary. For example, while it might make sense with a mortgage loan, it’s actually good practice to have some credit in your name just as security if you get divorced or lose your spouse in the future.

The most important thing is that you communicate with your partner about money matters and come to a decision based on what is best for the relationship.

Myth: Being added as an authorized user means you’re stuck
If your spouse adds you as an authorized user on their credit card, the account history will be added to your credit report. What’s more, if they miss a payment or accumulate a large balance, it could affect your FICO® Scores negative along with theirs.

But unlike a situation where you are a joint account holder, you are not liable for making payments if you are an authorized user. And once you’ve removed your name from the account, you won’t have any lasting negative impact (although read on for the next myth — you can get into trouble over debt from your spouse if you get divorced).

To be removed from an account as an authorized user, you can simply contact the credit card company and ask them to remove you from the account. Once that happens, the account, as well as the negative information associated with it, will disappear from your credit reports.

If you have requested the creditor to remove you from the account, but still report the account information to the credit bureaus, you can file a dispute to have the line of trade removed from your credit reports.

Myth: You’re off the hook if you get a divorce
Even if you never open a joint account with your spouse, you could be in trouble for any debts they incurred during the marriage.

This is especially true in community property states, where assets and debts accrued by either spouse during the marriage are considered owned and owed by both spouses.

In other states, debt incurred by only one spouse is generally considered that spouse’s responsibility, unless it pertains to family necessities such as food, shelter, and education costs.

If you are considering a divorce, consult a lawyer licensed in your state to understand how your assets and debts will be divided.

It comes down to
Getting married can be an exciting time in your life, and pooling finances is incredibly common. But when it comes to your credit, it’s important to know both the myths and the facts about how your new relationship may or may not affect your credit history and your FICO.® To score.

Above all, it is critical that you and your spouse communicate about your money to ensure that you are aligned with your financial goals and how you plan to manage your income, expenses, and debt.

About myFICO
myFICO makes it easy to understand your credit with FICO® Scores, credit reports and alerts from all 3 bureaus. myFICO is the consumer division of FICO – get your FICO scores from the people who create the FICO scores. For more information visit https://www.myfico.com.


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