Marriage is a significant milestone in people’s lives. It is a remarkable moment that entails a lot of changes for those who are engaged in it.
Once two people are married, their financial capabilities are typically merged. It empowers their purchasing and economic standing. But at the same time, there are some questions that married individuals ask when it comes to their financial life.
Here is one of them: does marrying a person with bad credit will affect my credit score?
The short answer to this question is “no.” Your credit score will not influence the credit score of your spouse. The same is true with the opposite. Your score is just yours.
But of course, this doesn’t mean that you have nothing to worry about. Of course, a person with a bad credit score can be described as someone who has a lot of debts, mismanaged finances, and other money problems. Marrying that person would cause you and your family trouble.
What Is A Credit Score?
A credit score is a number that gives a picture of how you have handled credit in the past. It is based on the information in your credit report, which includes your payment history, the amounts you owe, the types of credit you use, and how long you have had credit. A credit score summarizes this information into three numbers. The higher your credit score, the more likely you are to pay your bills on time and avoid problems with debt.
A credit score is usually used by lenders to determine whether to give you credit and what interest rate you will be offered. It can also be used by insurance companies and landlords to evaluate your risk and how much to charge you for insurance or rent.
A credit score is not only crucial to lenders. Even if you have no plans of borrowing money, it still has an impact in your other financial dealings. For instance, insurance companies typically look at people’s credit score in adjusting your rates and payment terms. Some landlords request your credit score to see if you are a worthy tenant.
In some situations, a credit score becomes the basis of employers in hiring people.
If you have been single for a long time, you may have built an extensive credit report. During and after your marriage, your credit score will have an impact on your life.
How Does Credit Score Works On Marriage
Just like what has been stated earlier, you will have a separate credit score from your spouse. Credit histories don’t merge during any union. After all, things like Social Security numbers and credit histories don’t have special stipulations once a marriage takes place.
As a matter of fact, these credit bureaus that track your credit history don’t include marital status on their gauges. Even if you have changed your name (i.e., you have taken the surname of your spouse), that will still not impact your credit score. You also don’t need to inform credit bureaus about these changes.
However, keep in mind that marriage can affect your credit score. The moment you take up loans, create joint accounts, or acquire debts together with your spouse, your credit score will take a swing.
Because of this, it is crucial that you and your spouse check your financial standing right after or before your marriage. Take a look at your respective salaries, investments, savings, and existing debts. In this way, you will be able to have better financial management as a couple. You will be able to create a budget based on your income and set financial goals together.
Doing Joint Loans
The moment when you and your spouse take a joint loan for important financial goals (i.e., house or vehicle), potential lenders will assess both of your credit records. These things will help them decide if they will give you a loan or not.
If your personal assessments suggest that one of you has bad credit scores, the one who should apply for the loan should be the one who has better financial standing. If you won’t take this option, there’s a good chance that you will get rejected by the loan you are applying for. If not, you will get the loan but with higher interest rates.
At this point, you have to realize that two bad credit scores will not beat a single good credit score. Keep in mind that a bad credit score will become a dragging factor for any financial matter.
Once you have taken a joint loan, the law requires that your lender should make a report about it. Your payment histories should be made under your names, not just one person. Because of this mechanism, missing payments in a joint loan will cause negative reports to the credit histories of you and your spouse.