If your sweetheart has a less-than-glowing credit history, it begins to affect you as soon as you apply for credit together and open joint accounts. Why? Because the bank reviews both of your credit histories. You keep your own history, but your new joint accounts appear on both of your credit reports.
So if you’re concerned that your spouse may not be as diligent as you are in paying bills on time, paying the bills yourself is a good idea.
Many couples decide to merge their accounts because consolidated accounts often make for easier record keeping and enhance that feeling of togetherness. But beware: Both of you are equally responsible for all debt incurred in any joint credit accounts.
Regardless of which one of you takes the credit card out for a joy ride, a missed payment on a joint account negatively affects both of your credit records. Also, if you miss a payment on an individual account, that missed payment may affect your ability to open joint accounts because both credit histories are considered.
In states with community-property laws, you may be responsible for your spouse’s debts even if you aren’t on the account. As long as the debt is incurred during the marriage, you’re liable, even if you receive no benefit from it or don’t even know about it.
Currently, 9 3/4 states fall into this category: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska has an opt-in provision, and Puerto Rico has community-property laws but isn’t a state
Even if you decide to consolidate your accounts with your spouse, always 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 or the untimely death of a spouse; having your own account can help you reestablish credit on your own.
If you have a credit-challenged spouse or partner or if you’re merely cautious and want to take the credit sharing slowly, you can always keep separate accounts and allow each other to be authorized users on your accounts. Both of you can charge on the account, both of you get the credit history reported on your credit reports, but only one of you is responsible for the bill.
Although this strategy can safeguard your credit score from a late payment, it also exposes you to the potential of at least one bigger-than-expected bill (if your spouse or partner is a dangerous shopaholic, this setup won’t protect you from his or her spending).
But if you can trust your sweetheart not to go crazy with the credit card, this method allows him or her to add credit history while you keep responsibility for and control of the account in your hands. (And, of course, if your sweetie gets out of control with the credit card, you can always remove him or her from the account.)
Provided you don’t live in a community-property state, separate accounts can really make sense, especially if you and your spouse or partner come together later in life and each of you has substantial assets of your own. As long as you both agree, this sort of financial independence can keep you looking attractive to your sweetie long after your personal charms have become less charming.