Do Credit Scores Merge after Marriage?
I’m getting married next summer and I’m worried about what will happen with our credit. My fiancee has an excellent credit score – never misses a payment, always pays more than the minimums, never gets close to maxing out.
On the other hand my credit kind of sucks. I had a few accounts go into collections in school, I missed a couple of student loan payments because I thought one of the loans was deferred, and then I went over my limits on a few credit cards when I was between jobs.Nothing major, but my score has definitely suffered as a result.
So now we’re getting married, and I’m worried that my bad credit score is going to bring her down. And it’s a big deal because we’re planning on buying a house next year and the last thing I want to do is ruin our chances of getting approved. What can we do to make sure we have the credit score we need to have when the time comes?
Vancouver, British Columbia
First off, congratulations on your upcoming nuptials and I wish you both all the best. Second, the situation is not as bad as you may think. Here’s why…A common misconception about credit scores is that when you get married, your credit profiles and credit scores automatically merge. This is just not true.
You credit profile is tied to your Social Security number. Since you maintain different SS# once you get married, it naturally follows that you maintain different credit profiles, too. So at the outset, there’s no reason that your bad credit score will “drag down” your new wife’s excellent credit score. You can get married and you’ll have your bad score while she has her great one.
The only way your past mistakes will have any impact on her score is if you add her to those accounts. For example, if she becomes a cosigner on a credit card where you had trouble or you make it a joint account, then it could have an impact on her credit. Note that this isn’t just about being an authorized user; she can be an authorized user without having that account show up on her credit report. So as long as you keep your “bad” accounts to yourself, they won’t impact her score.
Now, that’s a completely different matter from how your bad credit may affect your ability to qualify for a mortgage as a couple. If you plan on taking out the mortgage together, then both of your credit scores will be a factor in the approval process. In this case, a bad score on your end could prevent you from getting approved. If you get approved, it could at least lead to higher interest rates and less attractive terms on the mortgage.
Of course, if she applies for the mortgage alone then only her score will be a factor, but she would need to be able to prove that she has things like a high enough level of income on her own and all of the money for the down payments in her accounts in order to qualify alone.
Your best option is to start working to fix your credit now so you can qualify for a mortgage next year. The good news is that one year is plenty of time to improve your score.
- Go through credit repair to see if any negative remarks are actually mistakes that can be removed from your credit reports.
- Take steps to rebuild your credit. Make your payments on time, keep debt minimized. You can still use your credit cards for daily purchases as long as you can pay off the amount responsibly to help boost your score.
- Pay off any outstanding debts that you have now, such as car loans, so that when the time comes, you have a low debt-to-income ratio when you apply for your mortgage. This can go a long way in helping you get approved.
- Close new credit card accounts that you do not need, but keep old cards open as it will affect your score.
If you’re not buying until sometime next year, that gives you more than six months to fix your credit. With the right strategy, that’s more than enough time to bump up your score so you can apply for the mortgage together.
Best wishes and if you have time, think about taking a homebuyer education course to make sure you’re both ready before you take the plunge into homeownership.
Best of luck,
Jeffrey Schwartz is the Executive Director of Consolidated Credit Counseling Services of Canada and President of the Credit Association of Greater Toronto (CAGT).
If you have a question about a debt management program or just about finance in general, Jeff is here to help. Send us an email with your question to [email protected]. You’ll get the expert advice you need and your question may be featured here on our website.