Marriage is a big step for two people. Not only will you be sharing a life together, you'll also be sharing one very important thing: money. And with money comes the concept of credit.

There are some couples that never seem to worry about money, but many have to rely on credit in order to make their dreams come true. These may include buying a home, going on vacations, having a family. But let's face it, sometimes you can't cut it alone. You will have to take out credit together.

Here are some important things the two of you should know before you sign that joint application.

Credit 101

A credit rating is an assessment of an individual's creditworthiness. This evaluation is based on your borrowing history and your ability to repay your debts.

A person's income and availability of assets also affect your credit score. When you want to secure a mortgage or car loan, you need to have a strong credit rating. If you don't, the application will be denied.

Plan Your Financial Goals

Marriage is a big step. Just like any other stage in life, you should take it seriously enough to have a conversation about the shape of each person's financial health and what you need to succeed as a couple.

Here are some things you may want to consider:

  • What is our current financial situation individually? How will that affect our relationship as a couple?
  • What are our financial obligations? Can we afford to pool them together?
  • What assets do we bring to the table? What is our income level?
  • If it isn't realized already, what are our plans for homeownership?
  • Do we want to have children?
  • When do we want to retire? Can we do that realistically with our current situation?

Answering these questions, among others, can put you in the right direction toward a happy and financially sound marriage.

What Happens When I Get Married?

The most common misconception most people have is when they get married, their credit reports will merge into one. That couldn't be further from the truth. As a married couple, you will maintain two separate credit records and histories. That's because you each have different Social Security numbers. And how you deal with the credit you take out together will be reflected in your own credit histories.

If you decide to take out a loan with your spouse, your payment history will be recorded on your individual credit reports. When creditors generate reports, the law requires them to report information on a joint account in both of the account holders' names. So if you have a joint car loan and you miss any payments, those will show up on your credit history and that of your spouse.

Keeping Your Marriage and Finances Happy

We all know it's important to keep the romance alive in order to keep a marriage happy. But you'll also need to keep the conversation and momentum going if you're going to keep your financial health in check together. Try following some of these helpful tips.

Make sure you maintain separate checking accounts and credit cards after you say, "I do." By doing this, you can each sustain your own active credit record. Marriage doesn't mean you have to share your debts. That's a conscious choice the two of you can and will have to make together. It's all about trust.

Next, be sure to pay your bills on time since late payments are the fastest and easiest way to destroy your credit rating.

Keep yourselves in check when it comes to your finances and make sure you don't hide anything from each other—especially when it comes to joint debt. 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.

If that ever happens, 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.

But most importantly, talk to each other. There are times when we may all experience some financial hurdle. There is nothing to be embarrassed about. Being honest with each other not only helps your marriage, but it will also help keep your financial life together headed in the right direction.

The Bottom Line

It is important for couples to discuss their financial positions before getting married. Being aware of your spouse's credit history can help to maintain a healthy financial position after you tie the knot and reduce your financial strain.

The Advisor Insight

Marrying someone with bad credit won't affect your personal credit score, but it could have an impact in other ways.

Say you two want to buy a house. When you shop for a mortgage, you put down both your credit scores. It seems logical, but if you go that route, you probably won't be able to borrow as much, and you'll be borrowing at higher interest rates than if you applied with just your own good credit. Two scores are not better than one, in this case: The lower score will drag you both down.

So, if your partner has a poorer credit history than you do, be sure to keep your credit accounts separate after you wed. No joint credit card... no consolidating student loans. Keep it all separate.


Stephanie Genkin
My Financial Planner, LLC
New York, NY