For richer, for poorer: does marriage affect your credit rating?

Will my partner’s poor financial history harm mine?”

Will I become responsible for my partner’s old debts”?

A common worry before getting married or moving in together is that you’ll end up sharing your debts, as well as your heart and home.

Questions on internet forums clearly show that it’s important to be aware of how these big life decisions will affect your credit rating. We unravel the facts from the urban myths to help you start life together on the right foot.

What is a credit rating?

Your credit rating (or ‘score’) is a tool used by lenders to determine whether you qualify for a particular credit card, loan, mortgage or service. It helps to show what kind of borrower you are, and how likely it is that you will manage your repayments.

THE MYTHS

Your credit report will merge together when you get marriedUNTRUE

Everyone has an individual credit report, even after marriage. When your lenders report your accounts in your new name, credit rating databases such as Experian will match it to your existing history and continue to update it.

Changing your name will change your credit ratingUNTRUE

Simply taking your new spouse’s name won’t cause your credit histories to be merged. This is because it isn’t your name that impacts your credit history, but the activity associated with your name. If you open an account in your new married name, your credit score will simply add that to the history under your maiden name – you’re still the same person, after all. So you won’t have to start from scratch.

Your partner’s poor credit history will affect your own credit scoreUNTRUE

Your new spouse’s past credit history has no impact on your credit profile. Only when you open a joint account will any information be shared on both of your credit reports, so a missed payment on a joint account will negatively affect both of your records. This applies when you are cohabiting as well as after marriage – an account in joint names gives joint responsibility! It is also worth remembering that if you want to apply for a mortgage together, your spouse’s negative credit history could impact the rates you’re offered.

You are responsible for each other’s debtsUNTRUE

You are only legally responsible for another person’s debt if it is in joint names or you agreed to be a ‘guarantor’ (someone who would pay a person’s debts if they couldn’t). Therefore, both of you are responsible for debt incurred in any joint accounts, but you’re not automatically responsible for your new spouse’s personal debts. However, their debts may become a factor in dividing assets if you were to split up.

So what does this mean?

Your spouse’s accounts and past credit history prior to the marriage will not be added to your credit report after you are married, unless your name is added to them. Your account history will not be added to their report, either — unless you add them as a joint owner on your accounts.

The key to successful credit as a couple is understanding that your individual credit behaviour affects both you and your partner, should you choose to share your accounts.

It is possible to formalise your relationship arrangements and make sure that both of you are about your financial responsibility before the next big step. If you are getting married you might consider a Pre-nuptial Agreement, or if you are living together you might want a Cohabitation Agreement.
Read more about these on our Living Together page, or have a chat with one of our solicitors if you are unsure what might be right for you.

Article by Madison Fowler

Madison works with clients, who want a constructive process and a long-term solution that enables them to co-parent effectively and move forward with their live. Her aim is to protect clients and what is important to them without generating additional conflict or unnecessary costs.