When two people get married, the general assumption is “What’s yours is mine and what’s mine is ours,” but what if your spouse has a bad credit score? Although your spouse’s score doesn’t directly affect yours, it can affect your ability to qualify for a loan if you’re trying to acquire assets together.
For example, let’s say you try to apply for a mortgage to purchase a home (under both your names). Regardless of how awesome your score is, your spouse’s poor credit can hinder your odds of getting approved or getting an approval with good terms.
What if you apply for loans in only your name?
Applying for loans in your name is an option, but it’s rarely encouraged as it’s riskier. If most of your debt (as a couple) is under your name, you’re legally responsible for it if you separate or divorce. Even if a judge requires your ex-other half pay some of it, if he or she skips out on paying, your credit score is the one that will go down.
If your debt as a couple is under both names, your spouse will also be held legally accountable for it. In this case, if a divorce or separation occurs, both credit scores will be affected if one of you doesn’t pay.
How can I help my spouse improve his or her credit score?
For your spouse to build his or her credit, he or she needs to apply for or take on more credit. Here’s a few ways you can help:
- Your spouse’s bills should always be paid on time. If your finances are handled jointly, you can help ensure this happens. However, if you handle your finances separately, it could be beneficial to have weekly discussions or meetings to determine if bills have been paid on time and if both of your finances are on track.
- Motivate your spouse to pay down or pay off current debts. If he or she has high credit utilization, it could be affecting their score big time!
- Consider adding your spouse as an authorized user on one of your oldest credit cards. This could help him or her improve their credit score faster. Prior to doing so, make sure to check with the card’s issuer to ensure authorized users are also reported to the credit reporting bureaus.
- Monitoring your credit score helps you stay on track. If you already do this, encourage your spouse to monitor theirs, as well. This should be done at least once per year, but can be done several times by utilizing free credit reporting resources online.
If your spouse’s credit score isn’t ideal – don’t fret. The good news is, with time, effort and a little encouragement, it can be improved!
Let us help you find the best mortgage for your financial situation. Contact the Housing Buzz Team today!