You know the saying that when you marry your spouse (or commit to your partner) you also marry your spouse’s family? Yeah, so the same holds true about your spouse’s bad credit. While your spouse’s bad credit does not directly affect you or your credit, it can make it difficult when you’re applying for joint credit—like a mortgage to buy a home, for example.
It can even cause you to pay higher premium rates on things like auto insurance and can lead to denial if you’re trying to rent a home together. Your partner’s bad credit does not, however, transfer to your credit. Unfortunately, your good credit doesn’t transfer to your partner’s credit either.
If your partner does have bad credit, you don’t have to throw up your hands and scream uncle. Instead, here are some things you can do to make the situation better.
1. Joint Up
Opening some types of joint accounts, such as checking accounts, can help your partner’s credit if you have good credit. In a way, adding your spouse to a checking or savings account can help to give them a boost in their credit score—especially over time.
This is not true of all types of accounts, but it is true of something like a checking or savings account—a banking account.
2. Make Them an Authorized User
In other circumstances, you want to go it alone—meaning you don’t want to apply for joint credit when it comes to credit cards. If you apply for joint credit accounts, then your partner’s bad credit can cause you to pay higher interest rates or deal with less favorable terms.
What you can do, however, is add your partner as an authorized user on your credit card account. This gives them access to a credit card to use responsibly, which also allows them to piggyback on your good credit. Since the credit card company reports to the three credit bureaus, if you’re making your payments and making your payments on time, this is reported on their credit report too, since they are an authorized user.
3. Apply for Secured Credit
Have your partner apply for a secured credit card or secured line of credit. This is another great way for them to build their credit score and credit history.
It’s especially helpful if you have them apply for a secured credit card that allows them to upgrade to a regular credit card once their credit improves or once a certain period of time has passed where they have used the card responsibly.
Your partner can apply for and maintain this credit card account on their own, so that it directly helps their credit and you don’t have to be on the account with them as well.
4. Pay Down/Off Debt
Sometimes what drags your partner’s credit score down is a large amount of debt. Rather than go around closing a bunch of credit accounts, work on paying down and paying off this debt.
If your partner has a maxed out credit card that they’ve owned for the past 10 years, keep the account open. Work on making extra payments to reduce the balance. Work toward paying off the debt, which changes your partner’s debt-to-credit ratio, which is a factor in calculating their credit score. As the debt-to-credit ratio goes down, their credit score will work its way up.
5. ‘Til Death Do You Part
Commit to improving and maintaining your spouse’s credit for the long haul, just like you are with your relationship with each other. It takes time to build and improve credit. Commit to doing what you have to do (the previous steps included) to make it happen.
Open new individual and joint credit over time and as you need it. Make sure you and your partner always pay your bills and always pay them on time. Do what you can when you can to help your partner improve their credit so you can work toward doing things together, like applying for a mortgage and buying a home together.
6. Establish Good Credit Habits
So bad credit doesn’t just happen. It’s a series of activities that contribute to a low, poor, or downright bad credit score. It’s likely that there were missed payments, no payments, or late payments.
It might even be due to carrying too much debt. Whatever the reason is for your spouse’s d credit, work toward establish good credit habits. Set a budget together. Help them set up bill pay for their debt payments. If they’ve been lost on the path to bad credit, help them to see the path to good credit.
7. Avoid Being a Cosigner
While it is OK to let your partner piggyback on your good credit (like adding them as authorized user to your existing credit card account), avoid being a cosigner to help them open new accounts.
Being a cosigner makes you directly responsible for your partner’s debt. This includes their good and bad payment and credit habits. Adding new accounts to your own credit can ding your credit, which is the opposite effect you want when you’re trying to help your partner improve their own credit.
8. Always Make Payments on Time
One of the biggest contributors to a credit score is on-time payments. Work with your partner to make sure that all of his or her payments are made and are always made on time. This can go a long way in improving their credit history and credit score.
Getting married or making a lifetime commitment to someone marries a lot of your financial situation. It’s possible (and even advisable) to keep some of your finances separate. Additionally, you can work on your partner’s credit situation just like you would any issue, flaw, or problem in your relationship. Take these steps to up their credit score and better your overall financial situation.