NEW YORK (MainStreet) – Your credit history doesn't erase when you get married, but it isn't exactly unaffected either.
It doesn't matter if the person you're marrying has sterling credit and could get an issuer's black card just by asking for it or if their credit is a casualty of identity theft, divorce or years of neglect. Your previous credit history has absolutely no impact on that of your partner if you get married.
“Credit records which are established prior to the nuptials are never shared, inherited or combined,” says New York-based divorce attorney Bruce Provda. “Marriage doesn’t affect your credit score if you take your spouse’s last name. Everyone has their own credit report and scores, even if they live in a community property state.”
Everyone's credit reports are attached to their Social Security number. Your partner doesn't get your Social Security number when you get married, so they don't get your credit history, either. In fact, unless you mire yourself in debt paying for a huge hall, a vodka luge and a 20-serving-station cocktail hour, the simple act of marrying someone doesn't affect your credit at all.
Also, remember what we said about that Social Security number? If you're the partner who decides to change his or her name, that Social Security number stays the same. A new name doesn't wipe out your old credit history: It just jots down an alias next to your old name.
"Your credit score will continue to be tracked separately and is tied to your individual Social Security number. Only debts and accounts that you open jointly will be tracked on both of your credit histories," says Anthony D. Criscuolo, certified financial planner with Palisades Hudson Financial Group in Fort Lauderdale, Fla." "And still, they are tracked as part of your separate credit histories, joint accounts are just reported to the credit agencies under all of the social security numbers that are on the account."
Your spouse's credit history has no impact on you, nor does simply getting married automatically make all of your accounts joint accounts. You still have to be added as an authorized user or co-signer on all loans, but your partner's previous account and payment history won't affect you in the slightest. Adding you to a loan, in fact, is basically reapplying for a loan and refinancing from the existing terms.
It's the act of applying for those joint accounts that can get problematic. If you and your partner apply for a credit card or loan together, both of your credit scores will factor into the approval process. If one or both of you have bad credit, that could sink your application. Even if you're approved, higher interest rates and fees may apply.
"With everything else being equal, both parties' credit scores are important when opening a joint account. However, the greater disparity between the scores, the more potential problems,” Provda says. "A bad credit score will do more to harm the chances of a joint account than is benefited by the partner whose credit score is excellent.”
You can avoid that penalty by having the member of the couple with the highest credit score apply on their own, but that still won't eliminate all of the drawbacks. With joint accounts, or even accounts where only one partner is an authorized user, the history of the account is reported on both people's credit reports. Even if only one of you uses the account, the fact that your name is on it in any capacity means there are repercussions for everyone involved.
"If one spouse has a history of being financially irresponsible, especially if mainly due to late payments and missed bills, having the family finances managed by the financially responsible spouse can and will help boost the lower-credit score of the irresponsible spouse, but it takes time," Criscuolo says. "Credit history is just that – a history. It takes time to fix a bad history, but being married to someone who is financially responsible who will always pay bills on time will help the credit score of both account owners."
Still, on joint accounts, that means both parties are responsible for making the payments and lenders can come after both of you for restitution. If an account has only one authorized user, that primary account holder is on the hook for all the payments made and all liability. These are things you're going to want to sort out before any vows, cake cutting or bad dancing occur. That means bringing another person into your newly minted relationship: a trusted financial advisor.
"At the end of the day, making sure to provide all documentation and talking realistically with the credit manager can help,” Provda says. “The credit score is an important piece of the puzzle, but it is only one piece."
— Written by Jason Notte in Portland, Ore., for MainStreet
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This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.