Should bad credit be a deal breaker to marriage? How to manage joint credit

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I believe love conquers a multitude of things – even bad credit. But you have to be smart about it. If your mate has bad credit, by all means go ahead and get married BUT KEEP YOUR FINANCES SEPARATE. At least until you and your sweetheart work on improving his or her credit scores.

If you marry someone with bad credit here is how to manage joint credit:

1. Credit reports do not have a married category. Credit reports are maintained on an individual level and do not provide any indication of whether a person is married, single, separated or divorced. Your credit reports are not merged once you get married and are not updated to reflect that you’re married. Women who choose to change their names will have their new name listed as an alias. This should not have any impact on your credit scores.

When your lenders report your accounts in your new name, the credit bureaus will match it to your existing history and continue to update it, but only for the names associated with that account. Each individual's credit history will contain only the information that is reported in their name.

2. Stay away from Joint Credit. Your spouse’s past credit history has no impact on your credit profile until you open a joint account. After you get married there is no rule that requires married couples to apply for credit jointly. When you apply for credit jointly, both parties are responsible for the payment and the account will be reported in both of your credit reports. If one person forgets to pay the bill or the account goes into default, both parties will suffer from the negative credit impact.

3. Become an authorized user. When a spouse has bad credit and your credit is pretty good, you can safely add that spouse as an authorized user. Marriage doesn’t automatically make you an authorized user on your spouse’s accounts. Being added as an authorized user may help improve your spouse’s credit score as long as that account is in good standing with an excellent payment history and low credit utilization.

4. Get your spouse a secured credit card. The process of improving credit involves several strategies. One might be to pay down debt as lower debt owed on revolving accounts can mean higher credit scores. Another strategy may call for getting new credit in order to show how well you manage credit. A secured credit card reports to the credit bureaus and with on-time payments can help build credit.

5. What happens when you buy a house together. If you are planning a major purchase and both incomes are needed in order to qualify; it’s best to work together to rebuild your sweetheart’s credit first. If you don't get your spouse's credit file ready for a mortgage, their bad credit history will impact your mortgage rates. Even at the point of applying for a mortgage together, your credit reports and scores continue to remain separate.

It can be confusing because a mortgage lender will pull all three of your credit reports and all three of your FICO scores for both applicants, a total of six reports and six scores. Lenders simplify the process by merging the reports together, which often leads couples to assume they have joint reports. This is not true, no actual merging of credit scores or credit reports has occurred. It is done purely to make it easier to look at the reports and scores of both applicants.

A bad credit score is not a total deal breaker for couples. You have to know how to work around it and keep your credit separate until your sweetheart’s credit is healthy.

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