When planning their wedding and their new life with the one they love, most people don't think about how marriage might affect their credit. Will your spouse's credit affect yours, or vice versa? Will you be responsible for his student debt? Will your bankruptcy pull down his credit score?
Dear Mary: I'll be getting married in a few weeks. I have excellent credit; my FICO score is 820. My fiance, not so much. She has pretty bad credit and even filed for bankruptcy two years ago. Will her poor credit hurt my credit score once we are married? -- Travis
Dear Travis: Congratulations on your upcoming marriage! Fortunately, your fiance's credit history will have no impact on your credit profile once you're married. Information will only be shared on both of your credit reports if and when you apply for credit as joint account holders or you add her as an authorized user or account holder on your credit card accounts. However, when you want to buy a home together, if you need both of your incomes to qualify for the mortgage and you apply jointly, her negative credit history will impact your mortgage rates. It will be important for you to work together to improve her bad credit score. I wish you both a lifetime of joy and happiness.
Dear Mary: My husband and I do not have, nor have we ever had, joint credit with the exception of one mortgage on which we are joint tenants. How does that one joint mortgage with a bank affect our individual credit reports? Does all of his credit history now show up on my credit report, and will my credit history show up on his? -- Emily
Dear Emily: Only joint accounts and accounts on which you are an authorized user will show up on your credit report. However, your state laws may have a different take on whether or not you could be held liable for each other's debts. Some states have community property laws that might hold you responsible for your husband's debts even though you are not on the account. You would need to check with an attorney on that.
Interestingly, FICO announced in 2007 that it would no longer recognize authorized users in the credit scoring process. However, that decision was reversed in 2008. Anyone who is an authorized user on another's credit card account needs to know that all of the credit information on that account will be reported -- not just positive data. If the account owner misses a payment or pays late, that negative information will be reported to your credit file, as well.
I'm reminded of one reader who wrote that he was an authorized user on his mother's credit card account, simply so he could pay for her needs in her last years. She died and left a huge balance with numerous over-limit penalties and late fees. He was shocked to discover that all of the negative information was being reported to his credit file. In the end, he was not responsible for the balance due and the account was written off, as she left no assets. But all of the negative information will be reported to his credit file for seven years from the date the account was written off. He has no recourse because the information being reported is true, albeit devastating. Authorized usage has its pitfalls.
Mary Hunt’s column, “Everyday Cheapskate,” can be found at www.creators.com.