Marrying into Bad Credit

PUBLISHED – The Martin County Hometown News – January 14, 2005
Marrying into Bad Credit

By Ana Ribero
For Hometown News

The following question was asked at a recent DMCC free seminar in a Treasure Coast high school: I have great credit and recently married a man with awful credit. I’m afraid that his bad credit will drag down my good credit and we will not be able to purchase a home or take out big loans. I am also afraid that my credit will be ruined by his past credit decisions. What can I do?

Your credit report only reflects your credit history. So, do not worry about your husband’s past credit indiscretions because they will not show up on your credit report. The only items that will appear on your credit report are those that the two of you take on together, such as joint credit cards, auto loans and mortgages. Having said that, let me also say that you are right when worrying about his bad credit affecting your possibilities of getting a mortgage or other large loans together. Consider keeping your credit cards separate and taking out loans in your name alone whenever possible. This becomes more difficult to do, however, when you apply for a mortgage or other large loan where it may help to report both of your incomes.

In order to get favorable rates on joint loans, your husband needs to start repairing his credit history right away. Have him order his credit report from the three major credit bureaus, Experian, TransUnion and Equifax. Compare the credit reports and clear up any erroneous information. Next, he should pay off any charged-off accounts and bring all past-due accounts current. He should then focus on regularly making on-time payments to his creditors. Payment history accounts for 35% of a credit score, so after a year of maintaining a good payment history, he could see a boost in his credit score. During this time, he should try to abstain from incurring more debt. About 30% of your credit score is based on how much debt you have. Owing some money is fine, but being overextended with debt will look unfavorable to lenders. With that in mind, do not rush to close all of your husband’s old credit accounts at once, as it can lower his credit score.

Slowly and steadily, your husband’s credit history and score will improve. Hopefully, when you are ready to purchase a home, your excellent credit and his improved credit will get you credit terms you are satisfied with.

Contact: Jessica Stokes, Education and Research Coordinator