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Getting married can help improve your financial situation, but it doesn't mean you and your spouse will share a credit report. Your credit reports will remain separate, and any joint accounts and shared loans you open together will appear on both of your reports. While this can be beneficial, it's important to keep in mind that shared account activity can affect your credit scores both positively and negatively, just like your individual accounts do.
Opening a joint credit account or receiving joint financing means that you are both legally responsible for repaying the debt. This is important to keep in mind in the event that you separate or your spouse refuses to make payments, even if they were previously agreed. Regardless of who is “at fault,” shared liability will result in late payments that will negatively impact both parties’ credit histories. The creditor considers both parties responsible for the debt until the account is paid in full, regardless of changes in relationship status or divorce judgment.
An authorized user is a user you add to your existing credit account who is authorized to make purchases. Authorized users typically receive a card with their name on it, and any purchases they make will be reflected on your statement. The biggest difference between an authorized user and a joint account holder is that the original account owner is the only person responsible for repaying the debt. Authorized users can also relinquish their authorized status at any time, unlike the primary holder of a joint account.
If your credit score is higher than your spouse's as an authorized user, they may receive a credit score boost once added to your account. This will depend on whether your creditor reports authorized user activity to the credit bureaus. If your lender flags authorized users, your account activity could affect your spouse both positively and negatively. However, some lenders choose to only report positive information about authorized users, so a missed payment or misuse may not negatively impact anyone else's credit. Talk to your lender to find out how they treat authorized users on your account.
Whether you're married or separated, you and your spouse may decide you want individual credit accounts. Most creditors will allow you to create a previously joint account in one of your names if you both agree to the change. However, if the account has a remaining balance, your lender may not be willing to remove your spouse's name unless you can qualify for that same credit individually. Depending on your financial situation, it may be difficult to access financing and credit on one income.
Although deciding to open most of your accounts jointly with your spouse may make it easier for you to accept financing (two incomes are better than one), reestablishing credit individually following a divorce or separation n It's not always simple. To make matters even worse, your spouse may end up significantly damaging your creditworthiness, either deliberately or through irresponsibility after the breakup, making the situation even more difficult for your finances.
Before you decide to go ahead and open accounts with your spouse, take the time to discuss shared responsibility for these accounts and what you might do in a worst-case scenario. These kinds of financial questions can be difficult to discuss, especially when you're counting on things that will last a long time, but mutual understanding and respect for each other's credit can go a long way toward maintaining your score when you choose to share an account together. .