Once the honeymoon and celebrations are over, being married requires figuring out how to combine your finances with your spouse’s. While the effects of marriage on your credit are pretty straightforward, they may not entirely be what you expected.
Credit Reports Never Merge, Even When Married
The most important thing to understand is that there’s no such thing as truly merged credit. The major credit bureaus maintain an individual credit report tied to each partner’s social security number, and those reports will always remain separate. A combined or merged credit history will never be created.
If this comes as a surprise, you’re not alone, since many people hold the misconception that a married couple becomes a single entity for credit concerns. However, while there’s no such thing as merged credit, spouses can affect each other’s scores in many circumstances.
How Joint Accounts Impact Your Credit
The only link that exists between the credit histories of two spouses is their joint accounts. If you’ve opened a joint credit card account with your partner, for example, that account will then be listed on both your individual credit report and your partner’s. In that sense, you and your partner can affect both credit scores based on the amount of credit you utilize, since credit utilization is a factor in scoring. Your payment history on the account will also affect both partners’ individual credit scores.
How a Spousal Authorized User Impacts Your Credit
Your partner can also be linked to your accounts if you add them as an authorized user to credit or bank accounts. However, it’s important to note that the latest rules for FICO scoring don’t consider authorized users when calculating the score. This means that your partner probably won’t see an impact on their individual score just by becoming an authorized user on your credit cards and won’t be responsible for the debt. However, any debt utilization incurred by your partner will still be accounted for on your own credit report, even if they’re just an authorized user.
Situations Impacting Both Partners’ Credit
While two partners can always choose to maintain completely separate accounts, there are some financial situations where it’s much more likely that you’ll need to be considered jointly. Most of those situations revolve around mortgages or other large loans.
You can apply for a mortgage individually, but you won’t receive the benefit of your spouse’s income as the bank considers your application, and only your name will be on the ownership paperwork. If you apply for a mortgage or any large loan with both partners’ names on the deed or note, the bank will almost certainly require both individual credit reports to be included for consideration.
In short, only joint accounts will impact the credit scores for both partners. In most cases you will have the option to choose whether you maintain a joint account or an individual account.
For more information on marriage and debt, please visit our Marriage section. Here you’ll find a range of financial information on all thing’s marriage.