Your credit score, that three-digit set of numbers that are branded to you by the Fair Isaac Corporation (FICO) after you’ve taken out loans or credit cards might not seem all that important when you’re young, but they become incredibly important once you begin purchasing major items, such as a car or a home. The numbers essentially represent a bank or lending institution’s risk of doing business with you, or loaning you finances. “Just by looking at that number, they can determine your creditworthiness as well as the interest rate they’ll charge you on a loan,” says Genti Cici, CFP, and founder and CEO of StandUp Advisors.
While each individual earns their own credit score, after marriage your partner’s score impacts you as well. In other words, no matter how high your credit score is, if your partner’s is much lower, you’ll run into issues getting reasonable interest rates from most banks.
As a couple, your married credit score does matter. Here’s how.
Securing a mortgage or refinancing a house
If you and your spouse plan to purchase a home together, having solid credit scores during marriage is an important precursor. “Trying to secure a mortgage if one or both of the borrowers have an unfavorable credit score can end up costing a lot of extra money in interest or possibly result in outright denial of a loan,” explains certified financial coach, Emily Shutt. Thankfully, there are ways to get around it, such as limiting the mortgage application to only the partner with a higher credit score, but this too is limiting, as the mortgage application would only take into account one person's salary, which could result in approval for a smaller amount of money and limit options in shopping for a home, Shutt explains.
Getting approved for an apartment
The same is true for getting approved for a rental—even an apartment. Most buildings, especially co-ops, will want to see the credit scores of both applicants, even if one person is primarily responsible for paying rent. If one or both partners have lower credit scores, they risk not being approved at all, or end up needing to pay much higher security deposits or fees to secure a unit,” warns Shutt. “This can complicate things if you decide to relocate to a new city together when you're married, and may limit options when figuring out where to live.”
Buying or refinancing a car
One of the biggest things lenders look at when considering offering auto financing or refinancing is (you guessed it!) your credit score. In other words, if one or both of you don’t have a high one, you might be hit with an unfavorable interest rate that costs you way more money. “If you or your spouse is in the market for a new car, make sure you fully understand your current credit situation and what to expect from lenders, so you can shop for the best deal and make a decision that's best for your family,” says Shutt.
Paying off (or taking on) student loans
Going back to school after getting married might be a noble endeavor, but it also may require you to take out student loans. Your credit score after marriage will, once again, be the determining factor for the interest rate on any loans you take out. This not only affects you, but also your spouse—and the same goes for any student loans you incurred pre-marriage. “You'll want to confirm that both partners understand what any loan refinancing scenario obligates them to, so that you can agree as a team how to tackle debt,” suggests Shutt. “As with any other loans, having a strong credit score will put you in the most favorable position for securing refinancing on existing student debt or taking out new education loans.”
Managing credit card debt
No matter which one of you is the big spender or the big saver, both of you will be left responsible for any debt that’s incurred on shared credit cards. “If one or both partners have a mediocre credit score, it puts them at a disadvantage when considering new credit cards that they'll use jointly, because a lower credit score means a higher interest rate on any new debt,” says Shutt. “While interest rates might sound relatively small, they really add up over time depending on the size and duration of a loan or credit card balance.”
Starting a family
Hospital bills you incur before, during and after pregnancy, not to mention the medical and care expenses that pile up once the baby is born (hello, daycare!), are serious expenses. When it come to loans, sometimes credit scores during marriage are taken into consideration. “Because credit scores are seen as a general litmus test of overall financial responsibility and maturity, they can end up making or breaking a decision to start a family,” says Shutt. “While every family's situation is going to be different and it's a hugely personal decision, it's usually a good idea to work on repairing bad credit either before starting a family or at least in parallel during the process, so you set your growing family up for future success and security financially and emotionally.”