No matter how much they make your world go round, if your partner’s finances are in the doldrums, it’s going to impact your life after marriage. Thankfully, your Credit Score won’t suffer. Let’s find out more.
You’ve been through your share of crushing heartbreaks and think you’ve finally met ‘the one’. But, while it may not figure in the scheme of things at the moment, both your finances are going to play a crucial role after marriage and may even have the potential to threaten it. So, while you’re figuring out the finer details about your wedding venue, florist, caterer etc., don’t skip out on discussing the most important detail – your finances. For instance, if having your own nest figures in your list of priorities post marriage, consider this – while applying for a joint Home Loan as co-borrowers, the lender would be taking both your Credit Scores into consideration while reviewing your application.
Discussing your finances may or may not throw up information about yourselves like your financial habits, savings goals, financial aspirations etc. that reveal a totally unexpected side to your partner that you may not be comfortable with. It’s thus best that you iron things out with each other before taking the plunge. While marriage may mean making several household-related financial decisions as a single unit, your credit histories and scores won’t get merged post marriage.
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What happens to your credit report post marriage?
Nothing.
All credit bureaus will continue to maintain separate credit reports for you both. Even if your spouse has had bad debt or a poor credit history in the past, your details won’t get merged post marriage. That being said, if you become a joint account holder on any of those accounts that are littered with missed payments and liens, or apply for a loan together as co-borrowers as mentioned above, missed payments will show up on your report as well. The same applies to new accounts that you open as joint holders after marriage.
Missed payments or breaching the desired credit utilisation ratio can affect both your credit records. As explained earlier, your spouse’s bad credit record could impact both your abilities to qualify for new loans. This is because when the lender reviews your application, they will consider both your Credit Scores to arrive at a decision.
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What do you do if your to-be-spouse/spouse has a poor credit history?
Relax, your spouse’s poor credit record doesn’t spell doom for your finances. Not if you make reparations to fix it at the earliest. Start by addressing the problem at hand, first. Remember to communicate your concerns respectfully and calmly to your partner as individual finances can be a sensitive issue.
Another thing to bear in mind is that in spite of your marriage, continue maintaining your own record of Credit Cards and loans. If there’s been a long lull in your credit history, let alone taking out a loan just by yourself, you may not so much as be able to take out a loan jointly.
As a couple, start practising good financial hygiene like paying your bills on time. That’s the fastest way to turn your credit history around. If you both have radically opposite approaches to financial management, try to find a middle ground and agree upon regular practices that will help you both maintain a good Credit Score. This will help minimise conflict and you both can really dance your worries away on the wedding day.
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Quick fixes to improve your Credit Score:
If your spouse is at sea about fixing their poor credit history, be a true partner (for better or worse, remember?) and help them fix it by taking any of the following actions:
- Review your credit report for errors: To be able to keep your credit report errors in check, you must review your credit report at regular intervals. Even a small error like your name spelt wrong or a typing error in your date of birth can pull down your Credit Score drastically. After reviewing your credit report, if you come across errors, report them to your credit bureau immediately.
- Don’t miss repayments: Encourage your spouse to automate payments so that missing payment deadlines can be a thing of the past. Missed payments have the biggest impact on your Credit Score.
- Opt for a secured Credit Card for your spouse: A secured Credit Card needs a down payment or Fixed Deposit as collateral. With a secured Credit Card, your spouse can add positive information to his/her credit report.
- Clear your debts as soon as you can: Encourage your spouse to create a budget that will help them to pay off all their debts. Loan defaults have a lasting impact on a credit Score, so get those issues fixed first.
Marriage may mean taking a leap of faith but it’s better to make an informed leap than plunge into an abyss of financial doom. Not sure about your spouse’s Credit Score? You can check both of your Credit Scores for FREE by clicking the link below.