When you’re madly in love and preparing to walk down the aisle, asking the other person about his or her credit history may be the furthest thing from your mind. Love conquers all, right? Unfortunately, having a spouse with a poor credit score could make it difficult for you to qualify for a mortgage or other loans as a couple.
Once married, you still maintain individual credit scores, so the spouse with a higher credit score could apply for a mortgage individually, but that could create titling issues or a feeling of imbalance in the relationship.
We asked Jacquette M. Timmons, president and CEO of Sterling Investment Management, Inc., and author of Financial Intimacy, for tips on handling this sticky situation.
Don’t write off a credit-challenged spouse. Timmons sometimes sees couples where “the person with good credit is completely writing them off,” a dynamic that could be damaging to the relationship. “It’s important to take some time to understand the why,” she adds. “That can give you insight into the character of the person and their plan. Also remember that your credit score fluctuates several times within a given year.”
Figure out the root cause. According to Timmons, uncovering why the person’s credit score is low can help you determine a course of action. “Is it poor discipline in terms of paying their bills? Overconsumption? Or a byproduct of having been out of work for a couple of years and living off of credit?” she asks.
If it’s the latter, she adds, they may be able to bounce back once they’re earning a steady paycheck again. But if the issue runs deeper, you may want to have a conversation about how those choices impact their financial present and future.
Discuss how you’ll handle credit as a couple. The person with a higher credit score may be able to help their spouse boost their credit by adding him or her as an authorized user on an existing credit card. Those payments are reported to bureaus and count towards their credit score. However, that option is “dependent on both being in agreement about how credit cards are being used and that it will only be used for certain purchase,” says Timmons. “Sometimes you don’t need to have a check-in. But other times the agreement has to be if the purchase is over X number of dollars, you’ve got to discuss it first.”
Of course, there’s no rule saying married couples must have joint credit or checking accounts, so you could opt to keep things separate.
Schedule regular money dates. Once you’ve discussed your approach to handling credit cards, it’s a good idea to touch base with each other on a regular basis. “The couple that sets aside time once a week to check-in see a marked improvement in their communication overall and they begin to see that what they’re doing is having a positive effect,” says Timmons. “People have an unrealistic expectation around how long it’s going to take [to improve their credit score]. It took them awhile to get into that situation, so they’re not going to be able to reverse it overnight.”