Whether you’re planning a wedding or already married, it’s critical for you to understand how marriage changes your finances. Will my spouse’s credit debt affect mine or vice versa? Will our credit scores combine? In marriage, you do everything together: you eat together, you raise your children together and you decide on your financial future together. Much of your life is combined but does that include your credit? Here are 3 common myths that could give you a better idea of what you are in for.
Myth #1: My credit report information will merge with my spouse’s.
Fact: Nothing will happen to your credit after you exchange your “I dos”. Credit reports generated by Credit Bureau Singapore are maintained at the individual consumer level, not at a joint or family level. This means everyone has their own personal credit report and credit score till death do you part. Each individual will have to maintain their own scores throughout marriage. Each spouses’ credit score will continue to be calculated based on the information in his or her own credit report. If your spouse has a bad credit history of missed payments on his or her credit card bills, it will not affect your credit score. However, your score will be impacted if you become an authorised user or a joint account holder.
Myth #2: Our credit cards and banking loans are now joint accounts.
When you get married, there is no “rule” that all of your existing accounts will be converted into joint accounts. Your spouse’s credit history will not appear on your credit report and your credit information will also not appear on your spouse’s. If you decide to apply jointly for credit like credit cards or home loans, then those accounts will show up on both of your credit reports.
Also, both parties are fully liable for making payments and equally at risk if the account goes into default. If an account has only one authorized user, the primary account holder is fully responsible for all outstanding balances.
Myth #3: My bad credit will not affect my spouse’s credit score.
Fact: If you are applying for a supplementary card for your spouse, you are primarily responsible for the usage and payments due on the supplementary cards, the credit report will only show the factual credit data available of the principal cardholders. The credit history and repayment behaviour of supplementary card holders will not affect the principal cardholders.
However, if you have a joint credit account with your spouse, both of you are responsible for all debt incurred in any joint credit accounts. Regardless of who incurs the debt, a missed payment on a joint account will negatively affect both of your records.
The key to successful credit management as a couple is understanding that your individual credit repayment behaviour affects both of you. It is important to understand the possible implications that may arise from having a joint account together. At the same time, do consider how the payments stemming from a major credit purchase will affect your overall budget. Most importantly, be fully in the know about each other’s financial history and everything that could affect your joint future together.
If you have applied for a new credit facility in the last 30 days with any of CBS members banks, you can receive a complimentary copy of your credit report from CBS. Otherwise, you can purchase your report online to understand your credit report better.