Getting married is an exciting time for couples, but it can come with challenges, including merging finances. If your spouse has less than stellar credit, it may be difficult to access new loans or credit cards jointly.
Fortunately, there are effective ways to fix bad credit after getting married. In this guide we compare those methods so you can determine option is best to get you and your spouse in good credit standing.
Understanding Marriage and Credit
Before learning how to fix bad credit after getting married, first let’s understand how marriage and credit mix. Among several myths surrounding credit and getting married, many people believe that bad credit from one spouse automatically impacts the other. This is not true.
Credit reporting agencies that calculate your credit score only account for the credit and debt you carry. It is only when you combine credit accounts with your spouse that you have to think about the ramifications of his or her financial track record.
Joint credit can have an impact on your credit score, which affects how much you pay for financing major purchases like a home or vehicle. So, putting all of your financial missteps on the table before getting married is important. Have an open and honest discussion about credit scores, payment history, and total debt. The first step in managing bad credit after marriage is knowing all the facts.
Married couples often merge accounts after their wedding, as this provides a more streamlined approach to financial management. When both individuals have strong credit, merging accounts does not pose any immediate issues.
However, if one spouse’s credit is not as good as the other’s, that can cause some concern. So, evaluate how this will impact the other’s credit when merging accounts. Fortunately, the partner with strong credit can help his or her spouse with improving their credit over time by merging some accounts.
Below, we examine several different strategies for fixing bad credit after getting married so you can determine which is best for your situation.
Fixing Bad Credit After Marriage
The good news is fixing bad credit after marriage is not impossible. There are several steps to take to ensure the process is beneficial to both parties. Here are the action items to consider.
Step 1 – Check Your Credit Reports/Scores
The first step in fixing bad credit after marriage is gathering the information necessary to determine what “bad” actually means for you or your spouse. This begins with pulling your credit reports from the three major credit reporting agencies – Equifax, Experian, and TransUnion.
Your credit reports offer details about the current and past credit accounts and loans that you and your spouse have, separately, and any negative entries like bankruptcy, judgments, liens, collection accounts, or missed payments.
Thoroughly review your credit reports to find the items that are weighing on your or your spouse’s credit. You can pull your credit from the three credit bureaus for free once per year by using annualcreditreport.com’s tool. It is also beneficial to know your credit score. You can pay for access to your score directly through each credit reporting agency, or you can use an online service that offers your score for free.
Step 2 – Clean Up Your Credit Reports
Pulling your credit reports is essential because oftentimes, the credit information reported to the credit bureaus is inaccurate. An item that is not yours, is in the wrong amount, or is showing an erroneous missed payment could be bringing the credit score down.
Identify this misinformation on your credit reports, and then dispute these entries directly through the three credit bureaus. Errors that cannot be validated are removed from your credit report, potentially improving your credit score quickly.
Remember, bad credit is not necessarily due to significant events like bankruptcies, judgments, or collection accounts. Some credit errors may be as minor as a miscalculated balance or an incorrect late or missed payment. While it may take time, be sure to go through your credit reports and pay close attention to all the details.
Step 3 – Adding Positive Credit History
Once credit reporting errors are resolved through the dispute process, couples can work together to build a positive credit history. In some cases, bad credit is the result of missteps such as late payments, heavy reliance on revolving debt, or collection accounts. When these issues are accurate, building positive credit history is the most sound strategy for improving credit over time.
One way to accomplish this is the add a spouse as an authorized user to an account held by the individual with the stronger credit history. Adding an authorized user to a credit card account allows the partner with bad credit access to a credit line that, when paid on-time, builds a positive credit history. You don’t need to apply to be an authorized user, you’re automatically approved.
In addition, taking small steps to build positive credit history is key. This may involve getting a secured credit card with a low credit limit and being diligent about paying off the balance in full each month. For some, getting a co-signed account may, such as a personal or car loan, may help. Adding the “bad credit” spouse to the “good credit” spouse’s credit mix helps, as long as payments are made on time and credit use is not excessive.
Always be sure to talk about the responsibilities of each partner when combining credit accounts. This ensures payments are prompt and spending is responsible.
Step 4 – Steady Wins the Race
Establishing good credit takes time. Be patient with the process of repairing poor credit for you or your spouse, and know that the steps above will eventually provide results. Typically, building a positive credit history can take from six months to a year.
However, removing inaccurate information from your credit report successfully can improve you or your spouse’s credit in a much shorter period of time. It is also important to consider your options for paying off debt balances faster than required. This helps reduce your credit utilization ratio, that, in turn, boosts your credit score.
If this is not feasible, don’t fret. The process fixing bad credit after getting married is a slow, steady one, with patience providing the best outcomes.
If you are entering a marriage with a partner that has poor credit, be aware of the issues plaguing his or her credit score and come up with a plan to improve it over time.
Although there are a handful of steps to take along the way, know that following through makes a significant difference in your future financial lives. Having strong credit allows you to receive the best possible financing for major purchases, such as a home or a new vehicle. You’ll have more peace of mind for your lives together moving forward.