My husband and I refinanced a mortgage recently, and among the dizzying array of numbers we looked at were our credit scores — three apiece for each of us. Mine were lower. Every single one was lower. This despite my being the family finance nerd and the payer of bills (even the instigator of the refi).
The biggest difference in our scores was about 15 points — not terribly significant, but enough to make me wonder: How did this happen? Although credit scores aren’t affected when you get married, we’d shared checking, savings and credit card accounts for more than 20 years, so our finances were pretty thoroughly meshed. And I am a money nerd; he isn’t.
So I wanted our scores to be the same, or, truthfully, for mine to be slightly higher. Only they weren’t, and mine were lower. The precise “whys” are known only to the companies that develop the credit scoring models, but I can make some educated guesses why my scores were a little lower.
For one, I tend to be the one who applies for a credit card because it has better rewards or a lower interest rate (he’s an authorized user who actually remembers which card to use for gas and which for restaurants to maximize rewards). Applying for new credit causes a small, temporary drop in scores. It also lowers the average age of my credit. If our finances are pretty much the same, why aren’t our credit scores? I did some digging. According to Experian, not all credit issuers report authorized users to the credit reporting agencies.
So if it’s not the inquiries — which could still make a difference in scores if there were some in the past year — it could in fact be how the loans are reported, according to credit scoring expert Barry Paperno. “All it takes is one card or loan reporting on his or hers only to result in at least slightly different scores, with a 15-point difference being a relatively small difference,” he says.
Apparently, being the person who checks balances online and pays the bills counts for nothing, at least on credit scores. And happily, mild irritation about a small difference in scores and wishing I could somehow pull even with him also counts for nothing.
Working Toward Better Credit
But some differences in spouses’ credit scores aren’t so small. If one spouse has a markedly stronger credit score, that person may be able to help the other spouse build up their credit; for example, by adding him or her to a low-balance credit card that has been paid on time for a long time, says Credit.com’s Director of Consumer Education Gerri Detweiler. But that doesn’t mean spouses should rush in and try to merge all their credit. It may be smarter — and safer — to continue to keep separate accounts and to focus on the things you can control, such as paying down credit cards with high balances and making on-time payments, and not worry so much about the things you can’t control, such as negative credit that happened in the past.
What’s most important is the direction your score is moving. If you are trying to raise your scores, you’ll want to keep an eye on them, but not every day. One way to get an idea of your current score is to check it by using a free tool like Credit.com’s Credit Report Card. It’s good to be aware of where you stand, but not to obsess over it. If you are satisfied with your score — and eligible for the best interest rates — you’ll want to keep your score high. You do that much the same way you’d work to raise your score: by paying your bills as agreed and keeping the balance on credit cards below 25% (ideally 10%) of your credit limit.
So basically, I would do well to be a little less competitive and simply keep paying the credit cards and mortgage on time.
More on Credit Reports and Credit Scores:
- The Credit.com Credit Score Learning Center
- What’s a Good Credit Score?
- How to Get Your Free Annual Credit Report
- How Do I Dispute an Error on My Credit Report?
- What’s a Bad Credit Score?
- How Credit Impacts Your Day-to-Day Life
Image: Tetra images