In a relationship, there are many issues that can come about when it comes to money. Credit worthiness can be a tricky subject to delve into with your partner – especially when trying to divulge that your credit rating is a little more red than black. When one partner has excellent credit and begins a relationship with a new partner that has made mistakes in the past leading to a lower credit rating it can be difficult to begin a dialogue.
There are many things to remember when you marry into bad credit. Just because you are signing nuptials, does not mean that you are going to be effected by the lower credit rating. When you apply for a loan, credit card or other type of credit – unless you are applying for a joint account, the creditor does not have the permission to check the credit report of your spouse, unless their name is on the application. If you prefer to keep your credit histories separate, until the bad credit issues have been resolved – it can be crucial to discuss this early on in the relationship.
How are you going to deal with money in the relationship? Are you going to share finances? If one partner in the relationship has had money problems in the past leading to less than great credit, than it may not be a great idea to put this person in charge of the finances, unless they have demonstrated that they have changed their bad credit ways and are making amends to increase their credit score, repay old debts and improve the health of their finances.
Unfortunately, when a couple marries, there are larger loans that the couple thinks about – in order to further themselves in their financial goals. A mortgage is one of these loans. The income of both partners will allow them to obtain a larger mortgage, but – how will the less than great credit affect the outcome of the loan? The higher risk that a consumer appears to the credit card agency or mortgage agency – the higher interest rate that will be offered on the loan. There are many solutions to this problem. Simply waiting until better credit has been established, while saving a larger down payment could decrease the effects of the bad credit score on your partner’s side. Many lenders are more willing to work with potential homeowners that are offering a larger down payment that can be applied against the mortgage.
Until the credit history has been repaired, or is on its way to being repaired it is best to keep the finances separate. The partner with outstanding credit can teach the other partner methods to improve their credit score while co-signing for credit cards to ensure that positive history is being created. Trusting each other while working out of the bad credit process can be an effective way to dealing with a spouse that has a less than favorable credit rating.