Planning a wedding is a romantic time. It is also a time of considerable financial and practical consideration, as weddings are an expensive business. However, couples often fail to look beyond the wedding to the financial consequences of their marriage. Selecting a matrimonial property regime and potentially drafting an antenuptial contract are critical issues to address before tying the knot. And, as this article from fin24 points out, there are other financial matters to think about too – your married credit rating.
When you get married, it doesn’t mean your credit score and that of your spouse will automatically “merge”, according to credit bureau TransUnion.
However, there are a few things to know before you tie the knot.
What if my spouse has a negative credit history?
If your spouse has a negative credit history, it won’t initially affect your credit score in any way.
However, changes may come after you get married, if you decide to apply jointly for credit products like a loan (including a home loan) or a credit card.
Married couples may choose to apply together, as a joint income may make it easier to apply for loans for big-ticket items like a home.
However, this also means they will look at both of your credit scores.
If one of you has a bad credit history, there’s a chance your application won’t be approved or that they may charge a higher interest rate.
If you default on a joint account payment, this information will reflect as a default or judgement on both of your credit records.
TransUnion advises that, if you and your spouse have different credit scores, you will have a few decisions to make around how you want to handle applying for credit and loans, depending on your financial situation and priorities.
For instance, will the spouse with the better credit score make the applications? Or will you apply jointly and accept higher interest rates to improve the other spouse’s score?
Does marriage impact my credit rating?
Your marriage contract doesn’t affect your credit rating, or how you are assessed for a loan.
However, pay attention to who is responsible for the debt.
If you are married in community of property, it means you and your partner are equally and fully responsible for any debts incurred while you are married.
In other words, if you can’t pay your debts, your creditors can legally recover the money from your spouse.
On the other hand, if you have an ante-nuptial contract, only the primary account holder is legally responsible for paying any debts.
Does divorce make a difference?
TransUnion cautions that, when you co-sign on a loan or a credit card with your spouse, you take on legal responsibility for that account, and it appears as your obligation on your credit report.
If your spouse missed payments or defaulted on the loan, your credit reports will be affected – and the creditor may require you to settle the debt. Not even a divorce decree will relieve you of your liability to the creditor, unless the creditor releases you from that account.
If you have a joint loan, or have co-signed on a loan, TransUnion suggests you check your credit reports regularly to see how the other person is maintaining the account.
That way, you can address any potential problems early to avoid an issue on your own credit rating down the line.
* Reprinted from fin24, compiled by Carin Smith – 2020-01-19
Seek advice from an expert divorce lawyer
If you are planning on getting married and want to discuss how an antenuptial contract might benefit you and your spouse-to-be, we are divorce lawyers with vast experience in all aspects of matrimonial and family law. If you have any questions about the best way to organise your finances as a married couple, give Simon a call now on on 086 099 5146 or email email@example.com.