So, you're newly married and you're worried how your spouse's bad credit score will affect your good credit?
The good news is it won't directly affect your FICO scores at all. Why? Because each credit report is tied to a single social security number, which means that you and your spouse have individual reports, just as you did before your marriage.
However, this doesn't mean that you will get away Scott Free from your spouse's poor credit scores. In fact, if you plan to buy a house, get a car or take out a credit card together you could get the surprise of a life-time when you see the interest rate the lending company is prepared to offer you.
Joint Bad Credit Financing after Marriage
Let's say you and your newlywed decide to turn in your sports car for a more family friendly vehicle. When you do this, you file jointly meaning both husband and wife's names go on the application. When auto finance companies see this they will pull both of your credit reports to see where you fall:
- Excellent credit: 720 and higher
- Fair Credit: 620 – 720
- Bad Credit: 550 – 620
- Terrible Credit: 550 and below
If either of you fall into the "bad credit" category that will be their main focus. Typically, the spouse with better credit will be deemed the co-signer, while the poor credit holder will be the main borrower. Doing this allows them to offer you bad credit car loan with a high interest rate, short loan term and a down payment requirement.
Applying for Car Loans Individually as a Married Person
Once you hit the honeymoon stage it's normal to want to do everything with your spouse, however, if your spouse has some black marks on the credit report it may be best to do this thing on your own. Applying for an auto loan individually is one alternative to get more favorite auto finance terms, and avoid getting hit with high interest rate due to your spouse's damaged credit.
Under the Equal Credit Opportunity Act (ECOA) lenders are unable to ask if you're married or base your approval on race, color, religion, national origin, sex, marital status or age. The only factor determining whether they approve you or not is your ability to repay the debt. If you don't have the income to repay the debt on your own; you will be denied.
Add your Spouse as a Joint Account Holder or Authorized User
If you have decided that you are going to pursue applying for a car loan independently, but you still want to help your spouse repair their credit scores back up, you can do so by adding them to your credit card accounts as either a joint account holder or an authorized user. A joint account holder allows your spouse to use the credit, but they also become legally responsible to repay the debt, just as you are. An authorized user, however, is able to use the credit, but is not legally responsible to repay the debt. Before making any decisions as to which option you wish to pursue, keep this in mind:
- If you wish to remove your spouse from the account after a period of time, it is harder to do so with a joint account holder than an authorized user.
- If your spouse is an authorized user he or she can take off and max out the cards, leaving you behind to foot the bill.
- When you add your spouse to your credit account, the positive payment history will be added to their credit report, in turn helping their credit.
- Your credit scores will not be negatively affected, unless you stop making on-time payments.
Be sure to weigh all the pros and cons of these options before making a decision. If you wish to proceed with either of these situations you must contact the credit card company to issue your spouse a card.
As We See It
When you said your vows on your wedding day, you promised to love, cherish, and accept your spouse until death do you part, but that doesn't mean you have to acquire their past financial woes. Their past credit history has no affect over yours, and you will not see your credit scores plummet because theirs are low. The only way to make your credit score lower is to take on debt without repaying it.
On the other hand, you can help your husband or wife learn from past financial mistakes and get back on the right track with a joint car loan from Auto Credit Express. We have been helping couples obtain reasonable auto financing from bad credit car dealerships for over 20 years. We have a network of dealers that specialize in subprime lending, that are willing to work with all credit situations including bankruptcy and repossession.
Teach your spouse how to be financially responsible by making timely monthly payments with a new car. Everyone is more willing to learn when they have a shiny set of wheels! To get started fill out our free, quick, and secure online car loan application and you could be driving home in a new car tomorrow!