Credit and Couples

February 9, 2021
Shawn Lane
Consumer Credit Expert

With Valentine’s Day approaching, it’s natural to start thinking about all the factors that go into a successful relationship – trust, commitment, passion and a compatible approach to managing your credit.

OK, that last one might be a stretch.

But while talking about your credit score might seem decidedly unromantic, financial compatibility is a very real factor in the success of long-term relationships. That means understanding how your financial choices might affect your partner, and establishing shared  expectations about how you’ll approach money. Even if you decide to keep your accounts separate, there’s no way to entirely separate money concerns from a relationship.

Here are some important things to understand about how your relationship and credit score are intertwined.

Why Credit Matters in a Marriage
People often think that when they get married, their credit scores will merge together. For better or worse, your partner’s credit score does not affect yours after marriage – at least not directly. Credit scores always stay separate, and a lender can’t tell if you’re married just by looking at your credit report.

Here are some instances when your spouse’s credit score can affect you:

Taking out a loan together
Your spouse’s credit only affects you when shopping for a loan together, like an auto loan or mortgage. When you apply for a mortgage together, the lender will look at both credit scores and use the lowest score as the baseline.

If your partner has a bad score, that could make it harder to be approved for the home you want. If you do get approved, you may wind up with a higher interest rate than anticipated.

In this case, you could take out the loan in your name to get a lower rate, but you may not qualify for a big enough loan by yourself. Also, if you take out a loan by yourself and get divorced, the other spouse would have no legal obligation to help you cover the payment.

Renting an apartment
Your spouse’s low credit score could also affect you when renting a place. If your spouse has a recent bankruptcy, default or eviction on their credit report, a landlord may deny your application or charge a higher security deposit.

Co-signing for a loan
Co-signing on a loan for your spouse can make it easier for them to be approved – but it could also cause problems if they miss a payment or default on the loan.

If you co-sign on a loan for your spouse and they default, your credit would be affected. The default would show up on your credit report, and you would also be personally responsible for the remaining payments.

If you add your spouse as an authorized user on your credit cards, you’ll still be ultimately responsible for any charges they make. If they run up a high balance, it could increase your credit utilization ratio and ultimately decrease your credit score.

Living in a community property state
If you live in a state with community property laws, any debt your partner incurs during the marriage could become your responsibility. For example, let’s say your spouse ran up a $10,000 balance on a credit card and can’t pay. In this case, the credit card company could come after your assets to cover the bill.

This is even more crucial if you end up getting divorced. The judge could split all the debt equally, even if your partner took out the majority of it.

If you live in a community property state, consider signing a prenup before getting married. The prenup could state that any debt accrued by an individual will remain theirs.

Do you have credit questions or need help improving your credit scores? Schedule a free credit analysis with a Financial Renovation Solutions credit consultant today.