Money is a touchy subject, and our attitudes about it and our relationships with it harken back to things we learned as children. As such, far too many soon-to-be-married couples avoid specifically discussing it. Maybe they’re embarrassed by their lack of personal savings or their amount of consumer debt, or perhaps they grew up in a house where money matters weren’t out on the table. And then the lovers wed, only to discover that one or both spouses is saddled with massive debt, collections, or even a bankruptcy. This can delay plans to buy a house or start a family and create a damaging rift between the couple.
To prevent future money problems and even stave off divorce, it is important for you and your spouse to address your individual money issues before getting married. And once you are married, there are a number of ways you can not only protect your own credit, but assist your spouse in improving his or her credit score.
Protecting Your Own Credit Score
By the mere fact of getting married, a couple’s finances will be commingled. But if one spouse enters into the union with money and credit problems, there are practical ways to protect each of the parties.
1. Keep Separate Bank Accounts
If bad credit is a problem plaguing your spouse, chances are that he or she also has a spending problem or difficulties with simple money management. Your spouse may use credit and debit cards irresponsibly, which often results in overdraft fees and a poor relationship with the bank, as well as problems with creditors. To maintain peace in the house, it may be best to skip the joint account and keep separate bank accounts.
Pay bills in your name from your own account, and let your spouse manage his or her bills from another bank account – if he or she is late or defaults on a few bills, this won’t affect your credit. For this method to work, the bills that each person pays must be in his or her own name.
You might agree to keep a small joint account that requires both signatures to access. This can be used for romantic, low-cost splurges, such as a dinner date.
2. Maintain Separate Credit Accounts
Generally, married couples apply for mortgages, credit cards, and auto loans together. And in some cases, a joint loan is the only way to qualify for financing. Once you decide on a joint loan or credit card account, you and your spouse are equally responsible for the debt. This isn’t a problem if you and your spouse have good credit and money management skills. But all it takes is one spouse with a poor credit history, and both people take a ding.
Keeping separate credit card accounts is a key way to immunize yourself. Apply for auto loans and other loans in your name only, and if you have your own credit card account, don’t let your spouse charge to this account, as your spouse may go overboard and accumulate a lot of debt. As the primary account holder, you’re liable for the balance. This may create some problems with your loved one if it hasn’t been discussed in advance. He or she should know that this is a tool you’re using as a couple to protect each of you and eventually achieve your long-term financial goals.
Improving Your Spouse’s Credit Score
If you love someone who hasn’t had the most stellar credit history, assure them it isn’t a life sentence and that you’re in this together. Countless people have risen above a low credit score. Share these credit tricks to help you and your spouse achieve a better rating.
1. Add Your Spouse as an Authorized User
If you have a credit card account that you use regularly and pay off monthly, you might add your spouse as an authorized user so the account will appear on your spouse’s credit report. However, do not give him or her access to the credit card at first. Keep the credit card in your possession, and continue to use the account as normal. The idea is that your solid repayment patterns will benefit your partner by proxy. Your partner should check his or her credit report regularly, and eventually you should see a bump in the score.
2. Help Your Spouse Manage the Bills
If your spouse repeatedly sends late payments, don’t demand that he or she relinquish control over those accounts. Instead, work together to set up an effective bill payment system. Considering using an online resource, such as Mint, to help your efforts stay organized. Or you can do it together manually: Record due dates of all bills on a shared calendar, set up payment reminders, and sign up for online account management to keep track of all credit cards. You also have the option of setting up automated bill payments. Taking these steps shows your spouse that you’re eager to help for the betterment of you both.
3. Develop a Debt Elimination Plan
Paying off high credit card balances – but leaving the cards open – can quickly raise credit scores. Sit down with your spouse and devise a plan to pay down your collective credit card debt. Decide how much you owe as a couple and how much you can each put toward debt every month. This decision applies to both of you, so it has the added benefit of helping your spouse feel supported.
As a married couple, you are certain to hit a few rough patches along the way – but as a solidified unit, you can help each other out. Remember, building a strong credit score is a gradual process; it takes several months to notice a difference in your rating. But once you do, your diligence and discipline will be well worth the effort – both together and individually.
What steps have you taken to help your spouse improve his or her credit rating?