A:

A credit rating is an assessment of an individual's creditworthiness. This evaluation is based on an individual's history of borrowing money and repaying debts. A person's income and availability of assets also affects the credit rating or score he or she receives. When an individual wishes to secure a mortgage or car loan, he or she must have a sufficient credit rating. If a person is unable to demonstrate an ability to repay debt, his or her request for a loan will be denied.

Married couples generally maintain two separate credit records and histories. However, if you decide to take out a loan with your spouse, all payment history from then on will be recorded on both credit reports. When creditors generate reports, they are required by law to report information on a joint account in both of the account holders' names. It is important, therefore, that couples discuss their financial positions before getting married. Being aware of your spouse's credit history can help to maintain a healthy financial position after marriage and reduce financial strain.

Once you get married, it is also imperative that each of you have your own separate checking accounts and credit cards. This way you will be able to sustain your own active credit record. If there are long periods during which you do not have any credit history, you will not be able to take out loans by yourself. Both you and your spouse should make sure that you pay your bills on time because late payments are the fastest and easiest way to destroy your credit rating.

Although your spouse's bad credit rating may not affect your individual credit score, if that person continues to be irresponsible about debt repayment, both of you may suffer if you maintain a joint account. However, there are several actions you can take to protect your credit rating. For example, do not sign joint agreements, limit authorized users and keep checking accounts separate. These recommendations will help you to keep control of your finances and preserve your good credit.

For further reading, see Revealing The Hidden Costs Of Weddings, The Importance Of Your Credit Rating, Consumer Credit Report: What's On It and How is my credit score calculated?

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