Data Facts Blog


Getting Married? How Marriage Affects Your Credit

marriage--joint

 

Today, February 14th is the most romantic day of the year.  In fact over 2.2 million people will get married today and millions more will become engaged.    Getting married is a wonderful moment in life, but it can affect many things, including your credit.  So in the spirit of the holiday that love built, we’ve decided to debunk some credit myths associated with marriage, and its effect on credit. 

 

Our Credit Reports MERGE TOGETHER When We Get Married

Many people mistakenly believe that getting married means that your credit also gets hitched. That’s not true because you never share, inherit, or merge credit histories. Marriage has no affect on your credit score even if you take your spouse’s last name or live in a community property state. Everyone has their own credit report and credit scores.

If you have joint account—such as a credit card, car loan, or mortgage—with a spouse (or anyone else) the account history appears on both of your credit reports. But if you have a credit account in your name only, it never appears on your spouse’s credit file.

 

If My Spouse Has BAD Credit So Do I

Marrying someone with bad credit doesn’t affect your credit (unless your name is added as a co-owner on a delinquent credit account), but it can hinder your ability to get credit as a couple.

For instance, if you apply for a mortgage or car loan that requires both of your incomes to qualify, the lender will review both of your credit histories. Having a spouse with poor credit could cause your joint application to be declined or require you to pay a relatively high interest rate on a loan.

 

My Credit History Is ERASED When I Change My Last Name

If you change your name after you are married and report this change to your creditors, you will see some updates to your existing credit reports. Along with your old name, your new name will be listed as an alias. You will not have to start from scratch with a new credit history. There may be a few inaccuracies on your report as this transition takes place, so it’s important to check your credit report frequently during this period.

 

I Will AUTOMATICALLY Become A Joint User On My Spouse’s Accounts

Marriage doesn’t automatically make you an authorized user or co-signer on your spouse’s accounts. If you wish to be added to your spouse’s credit cards, you will need to call the creditors with this request. Please note that being added as an authorized user will not result in the account being factored into your credit score. As for loan accounts, becoming a co-signer for a loan usually requires refinancing.

 

Before getting married, make sure there is complete financial transparency. Understand your partner’s debt situation and credit history so you address any negative issues and increase your chances of living happily ever after.

 

7 Steps to Protect Your Finances During a Divorce

We all hope it never happens to us. The “D” word.  Divorce.

It’s a sad fact that lots of marriages end in divorce, and sometimes the relationship is contentious and hostile. If you are facing divorce, protect yourself and your finances with these simple tips:

1.  Keep detailed records.  The first step is to commit to making certain that all financial arrangements and obligations are well-documented.  If you end up having problems with a creditor for a debt that is not your responsibility, documentation can help clear the issue up faster and with less effort.

2. Dissolve every joint account.   This is one of the biggest mistakes that divorcing couples make. One person will keep a joint account, and the other person finds out months or years later that the account has been paid late or sent to collection. Be aware that divorce decrees do not supersede contracts. In other words, if you and your ex split certain debts in the divorce, but your name is still on the debt, YOU ARE STILL RESPONSIBLE FOR THE PAYMENT OF THAT DEBT.  This is a biggie, and can completely tank your credit score and ruin your finances.

Remove your spouse’s name on any accounts that you plan to keep (such as your car, etc). Move the utilities and any other bills into one name. If you share joint credit cards, divvy up the balance and open a credit card in just your name, and transfer the balance over to the new account. BE SURE all joint credit cards are closed.

3.  Sell the house if possible. The best idea is to sell the house and split any profits. It is imperative to not walk away from your house with your name still on the mortgage.  If selling the house is not an option, the person who ends up with the house needs to refinance it in his/her name alone as quickly as possible.

4.  Divide all assets. Split all cash, property, and any other assets during the divorce. Do not share assets with an ex.

5.  Be on guard online.  An ex can do some real damage when armed with passwords to bank and credit card accounts. The first action should be password protecting your computer and your cell phone (this will ensure your ex does not add a sneaky spyware).  Change ALL of your passwords on all of your accounts to something your soon to be ex would not know. Do not use birthdays, anniversaries, mother’s name, dog’s name, or anything else that your former beloved would be able to figure out.  Phrases like “bobpleasedie” or “lovereallystinks” probably aren’t good ideas, either.  A long password (10 characters or more) with letters in upper and lower case and numbers is the best option.

6.  Check your credit report. This is a good all-round rule for everyone. However, it’s especially important after going through a divorce.  Pull a credit report every 3-4 months, and scour it to make certain all joint accounts are closed and that there are no accounts you do not recognize. Follow up on any errors and get them cleared up immediately.

7.  Change your will and life insurance beneficiaries.  When moving on after a divorce, make certain to review all important documents, and implement changes where necessary. Remove the ex’s name from your will and any insurance policies in which he/she is named.

Divorce is never a fun endeavor. However, by being educated about the financial facts and following these simple tips, you can make it much easier to move forward and avoid the financial pitfalls that many people fall into when ending a marriage.

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.