By Manuel Tovar, September 10 – Hispanic Solutions Group
If marriage could be one of the best decisions you will ever make, in most cases, getting married also means sharing bills and financial bills.
If you are concerned about how your credit mix may affect your FICO® ScoreToday we offer you some common myths about marriage and credit, and some facts you need to know. And at the end of this topic, you will be able to distinguish if it is myth or truth.
Our specialists Hispanic Solutions Group shares the following facts:
1. Myth: Your credit reports are merged with your spouse’s.
As the adage goes, love conquers all and that can include a credit history less than stellar. But should you worry about the impact of your partner’s credit history on yours when you get married? According to studies, in short, no.
Credit reports are created and stored at the individual level, not at the household level. In today’s world, most people have a credit file with a certain level of credit. credit established in your name before getting married. While you may choose to mix your finances in other ways, your credit history is still yours alone, and the same is true for your partner. So if your credit history or your spouse’s credit history needs some work, no one will notice when looking at each other’s credit reports.
The only time you will find the same information in both credit reports is if they open a joint credit account, because the identity and important data of the partner or spouses will appear.
If your credit reports remain separate, it is important to know that when you apply for a joint loan, such as a mortgage, lenders will see your credit reports andcredit scoresboth from you and your spouse. Mortgage lenders will watch the scoreFICO Scoremedium in the three credit bureaus; between themTransUnionfor both you and your spouse. The lower of those two scores will be used in credit decisions.
2. Myth: Changing your name gives you a new credit history.
If you are considering changing your last name, or have already done so, you may be concerned that your old credit history will be erased because it was linked to your previous last name. Agenciescredit reportsThey have a logic that links the information to maintain a single credit file of a person with a name change. It can take a couple of months to link the files, so it is good practice to obtain a copy of your credit report after you have changed your name and verify that the information is correct.
When you apply for credit in the future or change your personal information on your credit accounts, the credit reporting agencies will add your new name to a list of name variations on your credit report.
3. Myth: Your Marital Status.
Your marital status affects your credit score.Your marital status can affect certain aspects of your financial life. For example, married people tend to qualify for lower auto insurance rates because they are statistically less likely to file a claim.
4. Myth: You have to apply for joint accounts with the couple.
Some married couples choose to apply for joint credit accounts, but it is not necessary to do so. While it may make sense with a mortgage loan For example, it is actually good practice to have some degree of credit in your name only as a security measure in case you get divorced or lose your spouse in the future.
The important thing is that you communicate with your partner about money issues and make a decision based on what is best for the marital relationship.
5. Myth: Being added as an authorized user means it could hurt your credit score.
If your spouse adds you as an authorized user in their credit card, the account history will be added to your credit report. And if they miss a payment or accumulate a large balance, it could negatively affect their FICO® Score along with your partner’s.
But unlike a situation where you are a joint account holder, you are not responsible for making payments if you are an authorized user. And once you remove your name from the account, it won’t have any lingering negative impacts (you may be affected by your spouse’s debts if you divorce).
Here the solution, to be removed from an account as an authorized user, you can simply contact the company of the credit card and ask them to remove it from the account. Once that happens, the account, as well as the negative information associated with it, will disappear from your credit reports.
6. Myth: If you get divorced, what happens?
Even if you never open a joint account with your spouse, you may have to pay off any debts you incurred during the marriage. This is particularly true in some states where community property is considered. Then the assets and debts accumulated by either spouse during the marriage are considered property and debt of both spouses.
In other states, the debt contracted by a single spouse is generally considered to be the responsibility of that spouse, unless it involves family needs such as food, housing, and educational expenses.
If you are considering a divorce, consult an attorney licensed in the state where you reside to understand how your assets and debts will be divided.
Finally, getting married can be an exciting time in your life, and merging finances is incredibly common. But when it comes to your credit, it’s important to know both the myths and the facts about how your new relationship will or won’t affect your credit history and credit score.FICO® Score. Above all, it is important that you and your spouse communicate about managing family finances, to ensure that you are in tune with the same financial goals and planning for the family.managing your income, expenses and debts, and thus they will be able to act in harmony.
We invite you to follow our social networks: LinkendIn, Facebook, Twitter and Instagram to find more information related to finances. Also on our YouTube channel The Credit Channel to learn how to improve your credit. If you need help in repairing your credit, disputing debts that do not belong to you, or other services, call us at (612) 216-1599.