by Laura Adams
A Money Girl podcast fan named Michael R. asks:
“What effect does marriage and divorce have on your credit score?”
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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.
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.
Disagreements about money and credit management are the most common reasons marriages break up. If you find yourself facing divorce, it can be difficult to unwind joint credit accounts, such as a mortgage or car loan.
You can’t easily remove a co-owner’s name from a credit card or loan without closing it or doing a refinance. If you owe more on a home or car loan than the asset is worth, you generally can’t do a refinance without paying the difference out-of-pocket at the closing.
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.
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