Home > Credit Score > 3 Ways Love Can Affect Your Credit Scores

Comments 0 Comments

Falling in love may make your heart sing, but it won’t make a bit of difference in your credit scores — those generally stay separate. That’s unless you feel moved to do something like … co-sign a loan, sign up for credit jointly or use a lot of your available credit to finance a big wedding (or big anything else). How can it hurt you? Let us count the ways.

1. Co-Signing

Let’s say your beloved needs a car to get to work. But the car dealers take a look at his or her credit scores (or lack of credit history) and decide to require a co-signer. Co-signing, or guaranteeing the loan, has lots of advantages for the person taking out the loan and almost none for the co-signer.

What you are doing is putting your good credit on the line for someone you love — and someone you believe will be able to repay a debt even though the lender has decided this person is not a good bet for repayment. You are taking responsibility for paying up to 100% of the loan plus any collection fees (even if you and your sweetie call it quits). So you should be able to comfortably afford the payments should you have to make them. Most financial experts advise against co-signing. But if you let your heart overrule your head, be sure you understand the risks.

2. Joint Accounts

Some credit cards don’t even offer them anymore. However, joint credit (and joint ownership) remains common for houses and vehicles. So even though you and your honey have different credit reports and scores, any skipped or late payment on these joint accounts will affect both of your credit scores.

Having your partner as an authorized user on your credit card can also affect both of your credit histories. However, an authorized user is not on the hook for repayment, as a joint user would be. A spouse with weaker credit could use authorized-user status on a credit card to help build a positive credit history. This can be a smart strategy for spouses if one has a higher score and wants to help the other. However, should the authorized user run up debt, it will show up on the primary user’s credit reports and affect his or her credit accordingly. So it’s not entirely risk-free. If a relationship ends, so should authorized-user privileges.

3. The Grand Gesture

The surprise anniversary trip to Paris, the engagement ring that was more than you budgeted — romance can kill a credit score (and then money trouble can kill romance — go figure). Here’s what happens: Say you have a credit card limit of $20,000. And you buy an engagement ring that costs $12,000. Let’s even say you have a low-interest card, or a card that gives you a few months of interest-free financing. But you’re using 60% of your available credit. Unless you have other credit lines that are hardly being used, you may see your credit scores fall. The reason is because you are using a higher percentage of your available credit. Most credit experts recommend keeping your credit utilization ratio below 30% (below 10% is even better).

So what can you do? Know where you stand. Know where your partner stands. You can check credit histories — and begin to correct any mistakes — by checking your free credit reports annually. You can also use a free tool, such as Credit.com’s Credit Report Card, to get two free credit scores and tips on how to improve or maintain them.

It’s possible to merge lives without merging credit, and you may want to do that, particularly if there is much difference in your credit scores. That way, the person with the higher score can maintain it while the person with the lower one works to increase his or hers. And eventually, if you want to take out a joint loan — say, a mortgage — that requires both incomes, you’ll be ready.

More on Credit Reports and Credit Scores:

Image: 4774344sean

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team