Credit 101

Getting Married? Here Are Some Credit Tips

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Let’s say that big day is quickly approaching—you’re getting ready to marry that special lifetime partner. If this is your situation, Congrats!  You’re probably spending this time tending to the hundreds of details associated with planning a wedding and beginning life as part of a married couple.

One aspect of marriage you’ll want to discuss sooner rather than later is your individual and joint approach to managing finances and credit. Let’s be honest, this is not always the easiest or most enjoyable conversation, but it is important, given that a primary reason for divorce often involves financial issues. The median age for a first marriage in the U.S. is in the mid-twenties according to the U.S Census, meaning that many people entering a marriage already have a source of income, some degree of established credit, and some level of experience managing a budget.

How to prepare

As a first step, each spouse should get a copy of their credit report (free at www.annualcreditreport.com) to ensure all information is accurately reported. Note, the credit you have legally contracted for as an individual (pre- and post-marriage) will always be reported as your credit and not become automatically “merged” with that of your spouse (credit bureaus store credit profiles on an individual basis). Any credit you obtain jointly will be reported on both of your credit reports, so it is really important to pay all your credit obligations (including joint accounts), as agreed, to maintain good credit on both of your credit reports.

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Note, if one of you has less than perfect credit that negative credit history won’t transfer to the other spouse’s credit report. But, it may affect your ability to get future credit (or credit at a lower cost) if you jointly apply for new credit. (When you apply for a loan jointly, the lender will typically pull both credit reports.) In some situations, it may be wiser for the spouse with the cleaner credit to apply individually and let the other spouse’s credit history improve over time.

If you are taking your spouse’s surname, you should notify your current creditors as well as the Social Security Administration of this change. It is not necessary to notify the credit bureaus of a name change, as they will automatically update the name on a credit report when your lenders report the revised name.

Lastly, it is a good idea to keep several credit accounts in your own name as a safeguard in the event of an emergency, death of a spouse, or a divorce. Doing this will ensure you have an individual credit history.

Whether you are married or single, the basic rules of sound credit management will result in a positive credit rating—paying your bills on time, keeping your level of credit indebtedness low and only seeking credit when needed.

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Image: Steffen, via Flickr

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