Couples in a relationship can differ in how they manage money. This may translate into differences in their credit profiles. Whether you and your partner are married doesn't matter. Financial woes are a common problem couples face. One partner's credit score can affect the other. If you apply for credit together, one bad credit score can affect both of you.
Separate Credit Scores
Different credit scores for couples who have not been together for a long time is not uncommon. In fact, each may be unaware of the other's credit standing until they apply for credit together. Questions about credit often don't come up until the time arrives to apply for joint credit card accounts or a home mortgage. No matter what the situation, marriage does not combine two credit scores into one. A couple's individual credit scores remain separate.
Joint Credit
Despite being married, if you apply for credit or a loan as an individual, a creditor will only look at your credit record. However, if you and a partner apply jointly for a credit account or as co-borrowers on a loan, the creditor or lender will look at each of your credit reports. In this case, you are both responsible for repaying the debt. Likewise, sharing a joint account can drag both your credit ratings down even if only one of you abuses the account. Individual credit scores can also be affected if one of you adds your name onto the other's credit account as an authorized user. These accounts appear on your separate credit histories. An account with a poor payment history will lower both your credit scores. On the other hand, adding a partner who has bad credit onto a healthy credit account as an authorized user can help improve that person's credit score.
Free Annual Credit Reports
Married couples still have separate credit files even if they share several joint credit accounts. Both partners can request a free annual credit report from each of the three major credit reporting agencies --- Equifax, Experian and TransUnion . By spreading out the times when you request your copies, you can get a copy of a credit report every two months between the two of you --- allowing you to keep a close watch on your credit report. Monitoring your credit report can help you identify errors that can lower your score.
Qualifying for a Home Mortgage
One partner's bad credit could disqualify the two of you from obtaining a home mortgage. MSN Money reports that current underwriting guidelines require that a lender default to the lower credit score when determining the borrowers' credit risk. Even if the other person has a high credit score, lenders base interest rates on the lower of the two scores. When a difference in credit scores means getting approved for a loan but at a higher interest rate, it makes more sense to leave the person with the lower score off the loan application. The drawback is that the lender will consider only one income. This can be a problem if the primary wage earner is the partner with the lower credit score. Likewise, if the person with the higher credit score has the lower income, this can affect the borrower's debt-to-income ratio. Lenders like to see less debt and more income. Even so, a lender might be more flexible and willing to make the loan if the couple transfers all their savings into an account in the name of the partner with the better credit rating.
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