Many people assume that once you are married, you automatically take on your spouse’s past credit and any debt they have. This is not the case. However, things change when you start incurring debt during the marriage. Once you open a joint account with your spouse, you are both responsible for the debt incurred. If you have worked hard to maintain your credit score and your spouse or future spouse has not, it can greatly impact your own credit score. Below are a few tips to protect your credit score in marriage.
1. Understand your liability for your spouse’s debts: You are not automatically responsible for your spouse’s debts once you say “I do.” However, if you have opened a joint account, applied for joint credit, cosigned on a loan or added your spouse as an authorized user, your credit score will reflect any of your spouse’s financial mistakes. If your spouse incurs debt during the marriage, you may be responsible for the debt to creditors if you live in a “community property” state. If you live in a common law state, you are generally only responsible for debts in your own name. Florida is a community property state.
2. Share your financial past with your spouse: Before you getting married, make sure you know of any debt or past debt your future spouse has owed and vice versa. When you’re planning a wedding, it may seem insignificant; however, disagreements about money is a leading cause of divorce.
3. Wait until you have your finances in order: If your partner has substantial debt, experts suggest waiting until you both have your finances in order to tie the knot. If you do not want to wait, you may consider waiting to open up a joint account in the marriage.
4. Make major purchasing decisions together: Make sure you both agree on when and how to make major purchases before tying the knot.
5. Consider applying for credit individually: If your spouse does not have responsible spending habits; you may want to consider applying for credit individually. If your spouse’s credit score is low, it can make your interest rate higher than usual.
6. Be careful when you cosign: Do not cosign on anything your spouse wants to purchase unless you are fully prepared to make the payments if your spouse fails to do so.
7. Add he or she as a joint account holder: If you decide to add your spouse as a joint account holder, your spouse is then responsible for the balance. The only way it will hurt your credit score is if your spouse uses all of your available credit or an amount that you cannot pay.
8. Add he or she as an authorized user: By adding your spouse as an authorized user, they are not responsible for the debt. They can however, get you in trouble if they spend more than you can afford to pay.
9. Keep your individual accounts open: Even if you open a joint account, keep your individual accounts open. The length of your account history is a factor in your credit score.
10. Consider legal agreements: Although it may make for an uncomfortable conversation, prenuptial agreements can be one of the best ways to protect you from your spouse’s debt in case you divorce. Prenuptial agreements let you and your spouse agree upon how debt and assets will be handled if the marriage does not last.
Click here to read more on ways to protect your credit score when you get married.
If you are in a financial crisis and are considering filing bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.