How Marriage Can Affect Your Credit and Your Money

Should you have joint credit and accounts?

Ah, marriage. It’s always “happily ever after,” isn’t it?

Not always, at least when it comes to talking about finances. In a recent American Express poll, 61 percent of couples said that talks of household finances lead to arguments, as reported by CNN Money. That’s up from 45% just last year.

It’s no big surprise that the strain on the economy is straining the economic situation of couples as well. So what can nearly newlyweds do to avoid the money arguments?

Talk now about how you’ll be managing your finances after marriage. To give you some help, we’ve compiled this quick guide of three different approaches to marriage and money, and how each one affects your credit, your bank accounts and your debt.

Separate All Finances

Credit: Applying jointly for credit means that your credit scores work together to get you approved or denied for credit. But since you’ve decided to apply for credit individually, you’ll neither benefit nor suffer from your partner’s score. This is good news for the partner with the higher score; their chances for approval won’t be dragged down by a lower credit score. But the spouse with the lower score won’t get the benefit of joining forces with a higher score to get access to credit they couldn’t have otherwise.

Money: With separate bank accounts, you won’t have to worry about your spouse checking up on your purchases, which could avoid some petty money arguments. But when it comes time to pay, you may have difficulty deciding who foots the bill. As far as debt goes, you won’t have to help shoulder any debt that your partner took on before the marriage, but you also won’t get any help in paying back yours.

Combine All Finances

Credit: By deciding to apply for credit jointly, your chance of getting approved for credit will be hurt by the partner with the lower score. And if one partner defaults on a joint account payment, the spouse will also suffer the consequences in a hit to their credit rating. However, applying jointly could be good news if one partner is less-established credit-wise. He or she could have access to credit that was previously out of reach. With a higher credit score in the mix, lenders will be more likely to approve the joint credit account.

Money: If one of you becomes unemployed, you’ll have the security blanket of completely joint bank accounts. And when it comes to date night, you won’t have to worry about going dutch. However, you may also become too involved in one another’s purchases on a daily basis, causing unnecessary disputes. For instance, you may see a purchase that was meant to be a surprise and bring it up unknowingly. When it comes to debt, you could be taking on debt that you’re not responsible for.

Combine Some Finances

Credit: When it’s a good idea to apply for credit together, you can. For instance, if you’re in the market for a mortgage, applying together can help both partners diversify their credit and give you a better shot at approval. However, applying separately will make more sense at times. When the spouse with a higher credit score applies for a credit card, their partner’s lower score won’t drag down the chances of odds.

Money: You’ll be choosing how to best manage your money, such as keeping individual accounts while opening a joint account to share some expenses. When it comes to making discretionary purchases, you’ll have the privacy of your personal bank account. Where debt is concerned, you and your partner can decide which debt to work on together, becoming a unified front against some of the tougher debt.

The Final Word

Money can be a touchy subject in marriage, but it doesn’t have to be that way. Come to a decision about how you’ll manage your finances together before you say “I do,” and be open about your current financial situation. You’ll likely avoid a lot of conflict simply by being up front before the wedding.

Credit Karma™ is a completely free credit management service that provides free credit scores, personalized savings recommendations, and financial education. We believe free access to one’s credit score is a fundamental consumer right. Credit Karma helps more than 2.6 million consumers realize the everyday cost savings of having a good credit score. Visit us at www.creditkarma.com.

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