Credit and marriage

Managing your credit can be tricky, even when you're the only person involved in your financial decisions. Add a new spouse to the mix, and you have to be extra careful to ensure your credit remains in good standing.

For many engaged couples, talking about finances takes a back seat to the excitement of wedding planning. But, before saying "I do," you need to be aware of the credit issues that could arise with a new marriage.

First of all, both you and your spouse should put all your financial records - savings, salaries, investments, real estate, and especially credit - on the table. If one of you has a less than glowing credit history, it will affect the other as soon as you start applying for credit together and opening joint accounts. In addition, your new joint accounts will appear on both spouses' credit reports in the future, so be sure to pay careful attention to your bills and pay them on time.

Once you've aired your credit laundry, you'll need to decide whether or not to merge all of your financial accounts. Many couples do this because consolidated accounts often make for easier record keeping. Just remember, both of you are responsible for all debt incurred in any joint credit accounts. So, regardless of who's incurring debt, a missed payment on a joint account will negatively affect both of your records. The same is true in community property states, where virtually any debt entered into during marriage is automatically considered joint. Consider also if you miss a payment on an individual account, that payment may very well impact your ability to open joint accounts because both credit histories will be considered.

The best way to keep your record clean starts with a solid understanding of the terms of your joint accounts. That means paying attention to interest rates, credit limits, annual or late payment fees and cash advance limits. If you decide to consolidate your accounts, you might want to keep at least one credit account in your own name as a safeguard in the event of an emergency. Keeping an individual account can also be a good thing in the event of divorce to reestablish an individual credit history.

Women who take their husband's surname after getting married need to notify the Social Security Administration and their current creditors of this change. You do not need to notify the credit bureaus of a name change. They will automatically update the name on a credit report when creditors report it.

If you plan to have children, you can best prepare yourself now by building a cash reserve to meet the eventual expenses of having a baby. This will help you avoid over using credit in meeting expenses such as cribs, strollers, diapers, clothes, playpens and toys. Building a savings account is also essential for buying a home and being prepared to face such emergencies as severe illness, disability or job layoff.

The key to successful credit management as a couple is understanding that your individual credit behavior affects both you and your partner. To ensure that you are able to quickly get credit at the best possible terms, be sure you both understand all the implications that accompany a joint account. In addition, consider how the payments stemming from a major credit purchase will affect your overall budget.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.