Will My Spouse's Bad Credit History Affect My Credit Score?

Marriage is one of the most celebrated social institutions. It solidifies the union of two people and puts them on the path to starting a family. However, issues can arise if your partner has credit issues. 

Even if you decide to share finances with your spouse, it doesn’t mean your credit reports will become merged. Similarly, if your spouse has bad credit, marrying them won’t have any impact whatsoever on your FICO score.

That being said, marital finance problems can still arise and lead to hurdles in your relationship. Today, we’ll examine and answer some of the popular questions people have about marrying someone with a poor credit history.

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Applying For A Joint Loan When One Of You Has A Low Credit Score

After marriage, homeownership is usually the next big milestone and goal for couples. This is where a substantial difference in credit scores will come into play. If you and your spouse apply for a joint mortgage, the lender will take both of your FICO ratings into account. If your partner's score is low, it can result in a higher interest rate or having your application denied altogether.

Why would people enter into a joint mortgage with a partner with bad credit? The answer is simple - some people don’t earn enough to qualify for a mortgage independently. If they do, the amount is much less than what they need to purchase their desired home. Even if your partner has a low score, they may still earn a decent income, meaning that together you would qualify for a higher amount than either of you would on your own.

There are specific trade-offs to consider. If your partner earns a decent income but has poor credit, then you’ll likely qualify for a larger mortgage at a higher interest rate. Conversely, applying alone may result in a lower amount at a lower interest rate.

Financial Problems Are One Of The Main Reasons For Divorce

Since the 1980s, divorce has been on a steady uptick in the United States, with just under 45% of all first time marriages ending in divorce.

When we dive deeper into these figures, we see that debt and financial skeletons are two of the most common reasons why marriage fails. If you've found someone you love and find yourself close to tying the knot, you may want first to consider precisely how marrying someone with bad credit and a high debt-load can affect you and your marriage in the long term.

How You Can Help Your Spouse Rebuild Their Credit Score

Financial issues alone aren’t usually enough to dissuade someone from marrying their partner of choice. Instead, many devote energies towards helping their spouse rebuild their credit and get out of debt. Below is a list of tips that, if followed, can serve as a guide to repairing bad credit.

• Keep track of spending: Overspending inevitably leads to zealous credit card use, which leads to debt. Have your better half consider using cash instead of credit cards
• Consolidate debt: If your husband or wife has a high degree of credit card balances outstanding, they may have trouble paying it down due to the high interest rate. In this instance, they may want to merge their debt with a consolidation loan, resulting in a single monthly payment and lower APR
• Make your husband or wife an authorized user: When you make someone an authorized user on a credit card, any missed/late payments will be reflected on both of your reports. However, should the account be kept in good standing and all payments up to date, not only will it maintain your good FICO score, but it can also help increase your significant other’s rating as well
• Create a debt management plan: Getting out of a financial hole is often much easier said than done, and in most cases, it requires a system of some sort. The effects of financial stress on a marriage can be significant, and if the plan isn’t followed, it could spell disaster. Proper budgeting, along with arrear reduction strategies, such as the avalanche or snowball method, can help your spouse achieve a healthy relationship with their finances
• Tackle high-interest debts first: In most cases, the best way to attack one's outstanding financing load is by targeting the outstanding balances with the highest interest rate first. By doing so, your partner's arrears will be significantly less expensive over time, making it easier to pay down