When You Tie the Knot
When you get married, you make a vow to spend your life with another person. You have found the one you want to be with, and you'll do what it takes to make it through good times and bad times. If you've ever been to a wedding, you have probably heard the line about staying together, “for richer or poorer.” If that shows up in common wedding vows, then money must be important to a marriage.
A woman does not have to have her husband apply jointly with her on credit accounts. Before the Equal Credit Opportunity Act, some lenders actually required a woman to get her husband on a loan before granting credit. Presumably, she would not be able to make the payments herself — even if she had a job and sufficient income.
Merging Lives, Merging Credit
Marriage is a merging of your lives. You decide to do things together. Some people say that you think with one mind and feel with one heart. As far as your credit goes, you still have two credit reports. This can be a good thing or a bad thing, depending on your credit. Some people think that marriage automatically merges the credit of both spouses. However, you should think of credit histories as separate, but sometimes combined. A good way to keep this straight in your mind is to remember that Social Security Numbers are a major factor in sorting out credit records. When you get married, you don't merge Social Security Numbers, you each keep your own.
If two spouses keep separate individual accounts, one spouse's credit cannot affect the others. Sometimes a person with good credit marries a person with bad credit. In such a case, the couple has to manage loans so that they always get the best deal. For example, you might have one spouse do all of the borrowing in the marriage. While this strategy keeps interest costs down, it may not be ideal (you'll see why later in this chapter).
Sometimes, it is not possible for one spouse to do all the borrowing. For larger loans, like home mortgages, one person's income may not support the loan. Lenders want to see that a borrower can reasonably make the required payments and provide for basic living expenses. They try to ensure this by keeping the required payments under a certain percentage of the borrower's total income. If it's a really big payment, you might need more than one income.
A bride-to-be should let her creditors know if she changes her name due to marriage. She does not have to use accounts in her new name, but doing so will keep things simple. Even if she changes names, she should keep one or two individual accounts open as the only borrower on the account.
Obviously, two working spouses will contribute to the family's living expenses. So, you might expect that you could just show a borrower that you have two incomes to support the payment. However, borrowers want both spouses to become personally liable for a loan, and both of their credit histories will be considered. From a lender's perspective, they don't know (or care) what will happen in the future. One spouse could leave or die, but the lender still wants the loan to be repaid.
A Helping Hand
If one spouse has considerably better credit than the other, the spouse with good credit can help the spouse with bad credit. Assume that a husband has bad credit, but he has the good sense to marry a woman with good credit. The woman likely has various accounts with a clean history. If the man is added to the account — as a joint account holder, for example — his credit reports will inherit the on-time payments of his wife. When added to the mix of the man's previous credit use, this new account spruces things up nicely. Over a period of several months to a year, his credit score is likely to improve. You can do this with a spouse or anybody else you want to help, but you should be careful not to let them ruin your credit.
