Marrying Someone With Bad Credit? Don’t Let It Damage Yours

marrying someone with bad credit

Money is central to the many steps people take in romantic relationships. From going on dates to moving in together, discussing financial topics like credit keeps expectations and situations clear.

But before marrying someone with bad credit, you should know how their poor score will (and won’t) affect your finances. From the first financial discussion to getting a mortgage together, here’s how marriage and credit scores work.

Are you marrying someone with bad credit?

Every couple trying to combine their lives and finances needs to sit down to discuss their financial situations. Don’t assume your soon-to-be-spouse has great credit — have a frank discussion and talk specifics.

Starting these conversations isn’t easy, but it is worth it. An ideal time to talk about it could be before making a big move, like getting engaged or moving in together.

You’ll need to know what each of your credit scores and histories looks like. This could impact the decisions you make together, including renting an apartment or taking out a personal loan together to finance a wedding.

Discussing your credit scores and finances

It’s important to be honest about your own financial situation, including savings, income, debts, and credit score. Bring any recent credit reports and scores to the discussion, and ask your significant other to do the same.

If either of you is missing this information, it’s time to get a free annual credit report. You might need to help them pull a free credit report, or check their credit score if it’s not something they’ve ever done.

Along with credit reports and scores, you’ll also want to discuss major debts or past delinquencies. It’s important to understand how the decisions to take on those debts were made, and the circumstance that led to a delinquency or default.

It doesn’t have to be a deal-breaker, but it’s important that the partner with a bumpy past owns up to those mistakes. That partner, whether it’s you or your significant other, should show that they’re on the right path to fixing things and have a plan to avoid similar mistakes down the road.

How marriage and credit scores mix

You’ve had the discussion about credit scores — and it turns out that you have a spouse with bad credit. You’re likely wondering, “Does my spouse’s credit affect mine?”

On its own, your spouse’s bad credit won’t impact yours. You will each maintain your own credit histories, reports, and scores.

Credit bureaus and lenders don’t consider your spouse’s credit when giving you a credit score or deciding to approve or deny a loan application in your name. Similarly, marrying someone with bad credit won’t lower your score at all, either.

Sharing credit accounts

The only way a significant other’s or spouse’s credit will affect yours is when you share a credit card or other account. This is the main way that marrying someone with bad credit affects your finances.

If you share an account and a spouse is irresponsible with the debt, racking up high balances or missing payments, that affects your score. This negative borrowing behavior will be reported to credit bureaus and show up on your credit report since you are a cosigner or authorized user of that account.

Getting a mortgage or loan together

If you two want to take out a loan together, your spouse’s bad credit could hold you back. What does that mean for the life you’re building together? If you’re applying for a loan or mortgage together, consider how the partner’s bad credit will affect your chances of approval and the rates offered.

You’ll both need to be listed as co-applicants on the loan for both of your incomes to be considered. But if one person’s credit is worse and this is also the partner with a lower income, it might be advantageous to have only the partner with good credit on the application and loan.

Alternatively, it’s possible that the two of you can find a third cosigner, like a parent with good credit, who can be added to the loan agreement to offset the partner’s poor credit.

How to help a spouse with bad credit

If your spouse does have bad credit, what can you do about it? There are lots of ways to work together as a couple to repair a poor credit history.

When you pull your credit histories and review them together, make sure to watch for any errors or misreported information. If either of you has errors present on your credit, take the time to dispute it and get it removed.

Second, the partner with good credit can add the other as an authorized user to a credit card with a longstanding positive history. This adds a credit line to the mix that has both a positive history and a long one. Both factors can help boost your partner’s credit score.

Lastly, work together on paying down credit card debts. You might also get a credit limit increase. The credit utilization ratio is a big factor in formulating a FICO score, the most commonly used by lenders. If you can lower credit card debts or raise the credit limit, it will lower the credit utilization ratio and boost a bad credit score.

Marrying someone with bad credit can introduce complications, but a poor credit score doesn’t have to be the end of your relationship, or even hold you back in your life together. Work together to fix it and soon, it’ll be a thing of the past.

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1 Includes AutoPay discount. Important Disclosures for SoFi.

2 Important Disclosures for Citizens Bank.

SoFi Disclosures

  1. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Finance Lender Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
  2. Personal Loans: Fixed rates from 5.49% APR to 14.24% APR (with AutoPay). Variable rates from 5.29% APR to 11.44% APR (with AutoPay). SoFi rate ranges are current as of December 1, 2017 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.29% APR assumes current 1-month LIBOR rate of 1.34% plus 4.20% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

Citizens Bank Disclosures

  1. Personal Loan Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2017, the one-month LIBOR rate is 1.23%. Variable interest rates range from 6.02% – 15.97% (6.02% – 15.97% APR) and will fluctuate over the term of your loan with changes in the LIBOR rate, and will vary based on applicable terms and presence of a co-applicant. Fixed interest rates range from 5.99% – 16.24% (5.99% – 16.24% APR) based on applicable terms and presence of a co-applicant. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with Citizens Bank at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, Citizens Bank checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Benefit: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.39% - 29.99%$1,000 - $50,000Visit Upstart
5.29% - 14.24%1$5,000 - $100,000Visit SoFi
8.00% - 25.00%$5,000 - $35,000Visit Payoff
5.99% - 16.24%2$5,000 - $50,000Visit Citizens
5.99% - 35.89%$1,000 - $40,000Visit LendingClub
5.25% - 14.24%$2,000 - $50,000Visit Earnest
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