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How marriage affects credit
How Marriage Affects Credit

Before you get married, it's a good idea to understand how marriage affects credit (and, unfortunately, how divorce affects credit). So, to understand how marriage affects credit and how divorce affects credit, you’ll need to think about individual and joint credit financing.

Credit Accounts: Individual vs. Joint

When you apply for credit (such as a credit card or a mortgage), you will need to choose between an individual and joint credit account:

 

  • An individual account

    Your own income, assets, and credit history are the only considerations here. Regardless of whether you are married or single, you alone are responsible for paying off your debts. The account will show up on your credit report and your credit report alone. Unless the account is in some way linked to your spouse or partner, there will be no links on credit reports with individual accounts.

    An individual account has its advantages in that only you are responsible for it; no one else can negatively affect your credit record. However, if you have a low-paying or part-time job or do not work outside the home, you may have difficulties in getting credit if you cannot include your spouse's income. As with all money matters, what you get will depend on your personal circumstances as well. And, if you have any financial association with another individual (even if you have separate bank accounts) then this may appear on your credit report.

  • A joint account

    A joint account includes both your income and that of your spouse together with joint financial assets and credit histories. Both of you are responsible for ensuring that joint credit debts are paid, and joint accounts will appear on both of your credit reports. Obviously, there is a benefit here in that your financial clout may be stronger when you need to apply for financial products if you have two incomes to offer. However, you are also both responsible for any debts, even if you divorce and separate.

    The danger is that a bitter ex-spouse can seriously damage your credit history through joint accounts. If you have financial ties to another individual then he/she will appear on your credit report as an ‘associate’. This can be an issue when you think about how marriage affects credit and how divorce affects credit.


What happens if you divorce?

If you are considering divorce or separation, then pay close attention to the status of your credit report during the process and think about the following issues on how marriage affects credit and how divorce affects credit:

  • If joint accounts are maintained, make sure you make regular payments during this interim period so that your credit record won't suffer. As long as there is an outstanding balance on a joint account, you and your spouse will remain responsible for it. In some cases, you can ask credit reference agencies to create a ‘disassociation’ between you and your partner if you are no longer together even if you still share an account. This ‘separation’ is important when you’re thinking about how marriage affects credit and how divorce affects credit.

  • If you divorce or separate, then think about closing down joint credit accounts or splitting them into separate accounts. You should also take your partner off your accounts (and vice versa).  This won’t happen automatically if you divorce or separate; you’ll have to make it happen!

Now that you know how marriage affects credit and how divorce affects credit, and once you have sorted out your finances, you can contact credit reference agencies and arrange to have joint credit links between you and your partner or spouse removed. You may need to do this with all credit agencies or just with one who may contact the other agencies on your behalf.

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