By Candice Choi, AP Personal Finance Writer
NEW YORK (AP) — One perk of marrying into royalty? Kate Middleton isn't up at night worrying about Prince William's credit score.
For everyone else, a spouse's financial track record can be cause for concern. Marriage itself doesn't automatically trigger changes in scores but the history each spouse brings into the union can significantly impact shared and individual fortunes.
The exact formula varies, but credit scores are based on complex algorithms that include factors such as the length of your credit history, the amount of available credit, outstanding debt and any negative marks such as bankruptcies, collections or late payments.
There are several different scores marketed to consumers, but the FICO score is still the most widely used by lenders and ranges from 300 to 850.
As the wedding season gets under way, here's a look at how credit scores factor into married life:
A common milestone after marriage is buying a home. This is perhaps when a spouse's credit score is most critical.
If the mortgage is going to be under both names, the bank will check each spouse's credit score in determining eligibility and the terms of the loan. But how the scores — and other financial information — are weighed will vary depending on the lender.
The lender may take an average of the two scores, or in many cases, simply use the lower score to err on the side of being conservative, said Careen Foster, director of scores product management at FICO Inc.
So even if your score is an impressive 780, the bank may base the loan's interest rate on your spouse's score of 620.
That would translate into a big financial hit; on a $200,000 mortgage, the payment would be about $1,000 a month for the stronger score, versus about $1,200 a month for the lower score, according to FICO. That's for a 30-year, fixed rate mortgage, assuming 4.44% and 6.03% interest for the respective scores.