Marriage can impact many things, financial health included. While your new status won’t affect your credit score as an individual, it may affect your credit health; more so, mortgage terms and opportunities for an unmarried individual vs. a married individual could differ. Remember, marriage is a legal union, so it can affect any financial step you take once you and your spouse sign up for a joint credit account.
Here are areas you must look into:
Payment defaults and good credit practices
Once you and your spouse sign a mortgage together, any account transaction will affect your credit. Your credit score can plunge if either of you defaults on a mortgage payment. On the upside, your credit scores can soar to unprecedented heights if you and your spouse observe good credit habits.
A spouse’s lower credit score
Any mortgage, loan, or shared credit account you and your spouse apply for may be subject to hard credit scrutiny. The concerned company could use the lowest credit score as a basis for the account’s terms of agreement. The spouse whose excellent credit allows them to pay lower interest rates may have to pay higher interest on loans and mortgages because of their better half’s poor credit score.
Being an authorized user of your spouse’s credit card
As an authorized user, you’re entrusting part of your credit score to your spouse. You or your spouse’s credit score improves every time any of you use your card responsibly. But it will plunge if any of you miss payment deadlines or buy something you can’t pay for on time.
Shared debt
A married couple shares debts once they co-sign a loan, joint credit card, or mortgage. Should one of them pass on, the lender can collect debt from the surviving spouse. This practice is institutionalized in some states like California, where the concept of community property makes either spouse responsible for debts they incur during marriage.
Name change
Normally, this should have no effect on your credit report. But two people with similar names may incur a higher risk of getting erroneous credit reports. For example, what was meant for one could be sent mistakenly to the other. So, make sure to check credit reports 30 days after you’ve updated your name. Make sure your new name shows up in your credit card report by informing the bank, the credit card company, and other financial institutions about the change in your name. If not, credit bureaus won’t be able to make the necessary adjustments. You should also spot and dispute errors right away.
If you’re a newly married couple or are planning to get married and you’re in any of the communities of New Jersey, you can turn to us – the Pagnotta Homes Team – for advice on improving your credit scores or getting out of problematic credit situations. Our team has extensive experience in helping people with their credit scores, especially when getting ready to apply for a home mortgage. Call 908.436.7947 or contact us here.