Is your spouse drowned in debt? Read this.
Published: October 17, 2014 | Updated: July 23, 2021 | Posted by: Moneymax | Lifestyle
Marriage is in its manageable form if you think it just means adjusting to an all-night of snoring, unreasonable nagging, tolerable jealousy, and all the not-so-amazing facts about your spouse. But since it’s never a fairy tale, both of your finances are part of the boundless compromise you need to face every. single. day.
What would you do if your partner is in a bad debt history? Here’s how to deal with it:
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Will your spouse’s bad debt affect your credit score?
No. After marriage, you’re going to share everything together. There is such a thing as joint accounts, but there is no joint credit score. Or a credit score affected by the spouse’s credit score. In other words you can keep your credit history or score good, even if your other half has a bad credit history.
Your credit score will show the details of your accounts that are associated with your name – credit card, loans, among others. If your spouse is a co-signer, then that’s the time your credit score will get affected in that specific account.
What will happen to joint accounts with bad debt?
This is the time when your credit score will be affected. When you sign for joint accounts after you say “I do”, the credit history of these accounts will be displayed at both you and your partner’s credit reports.
For instance, you own a credit card for five years now. After you get married, you signed up your spouse as a co-owner of the account. Every activity you and your spouse do with that account will be reflected to both of your credit score. But everything you did in the past, before actually sharing the account won’t.
If you do this, you have to be careful on your credit activity because it will not just give one bad credit, but the two of you.
How to help your other half on soaring from bad debt?
Before a bad credit history affects the two of you and makes things worse, apply for a joint credit account that doesn’t equate to a big loan amount. Apply for a credit card. One partner’s good credit history can lead the way of the credit card approval. But the thing is that you have to avoid credit card mistakes that could give the both of you to more debt. Use your credit card on boosting your credit scores bit by bit, especially if the card is mainly used by the spouse who has a better credit score.
Take note, though, that not all things financial-wise should be conjugated. For instance, if one has a bad driving record, you should get a separate car insurance policy. If you have a conjugated car insurance policy, you will end up paying for more because the other will make a more expensive car insurance premium.
Though all these is possible, avoid neglecting your credit score as early as when you’re still single. When you plan tying the knot someday, keep your debts and accounts separate especially if financial obligations are future worries. Guidance and support for each other is a good way to keep up with debt and financial planning together will be a fruitful practice.
With a goal to help Filipinos lead healthier financial lives, Moneymax regularly publishes tips and tricks on personal finance and lifestyle, among many other topics. For more finance-related news and articles, follow Moneymax on Linkedin.