My Newlywed clients often ask me about how their credit score changes when they get married. I am sharing some of the typical myths I hear and discussing how your credit score is really affected by getting married or divorced.
Myth 1: We have a joint credit score as a couple.
Credit scores are calculated and given on an individual basis. When you get married, your credit scores do not get merged into one joint score. You will each remain to have individual credit profiles that will fluctuate as you get new credit cards, buy assets and make payments.
Myth 2: When I change my last name, I have to start my credit history over from scratch.
Your credit history is connected to your social security number, which does not change. Don't worry about changing your name, as it will not affect the score you currently have or the history you have built. When you review your credit report (www.annualcreditreport.com) you should see your credit history from before and after you were married. If not, contact the credit bureau and file a report.
Myth 3: When we go to buy a car or home together, it won't matter if my spouse has a bad score, because I have a good one.
When you apply for credit together they will determine the interest rate you jointly qualify for based on both your incomes and credit scores. Now, this might not be in your best interest if you have a higher credit score than your spouse. Sometimes it is best if you can buy a joint asset in only your name if you can get a better deal on monthly interest payments (consult with an attorney or tax professional before doing this to be clear on the implications). Having higher monthly payments over time can affect your ability to save for and purchase a new asset. When going to buy a large asset like a home, you will need to both apply to be owners, since it is much harder to qualify as one person. Having a spouse with a bad credit history could affect tremendously how much you will pay in interest over time, especially on a large asset. So, before you make a big purchase, look at both your credit histories and work on getting your scores up.
Myth 4: When we get married I will add my spouse as a user of my bank and credit cards. They will then close their personal accounts. It will not affect their credit score.
After getting married, it can be a balancing act to determine when to close and open new joint bank and credit card accounts. Credit history accounts for 15% of your credit score, so take it slow when closing and opening new accounts. Try not to close accounts with long histories right away. Slowly close old accounts as you build up history on your new ones. When requesting new credit, also take it slow. It can be a red flag when you are requesting new credit more than once every 6 months.
Myth 5: If we get divorced, I no longer have to pay the debt my ex-spouse incurred while we were married. It will be removed from my credit history.
If the debt is on a joint credit card or a house/car in both of your names, you technically are still a 50% owner of the debt even after a divorce. Even if a judge assigns the debt payments to one spouse in a divorce decree, you can still legally be held responsible by the lender to make sure the debt gets paid. If your ex-spouse does not make their required payments, the lender could make you pay the bill and it can hurt your credit score.
Make sure you are both transparent about your credit history before tying the knot. Continue to monitor and communicate about your own individual credit reports throughout your marriage. Make sure you know how your credit is being used and what it is being used to buy. The goal is for both spouses to have excellent credit (750+), which translates to lower borrowing rates and money saved for your long-term goals. Having a good credit score is one of the easiest ways to save money.
FICO© score breakdown: