Spouse’s poor credit could lower yours

LSU AgCenter News

January 16, 2008 at 11:40 am  | Mobile Reader | Pring this storyPrint 

You’ve taken good care all your adult life to pay bills on time and maintain a high credit score. You expect your high rating to continue after marriage, but it could drop if your new spouse has a low credit score.

“Be careful when you get married because your spouse’s lower credit score could be held against you,” says LSU AgCenter family economist Dr. Jeanette Tucker.

Your credit scores will stay the same when you get married unless you apply for credit together, such as applying for a loan to pay a mortgage.

Both credit histories are then looked at.

If you both have good credit scores – say, over 750 – this is great, Tucker says, but if your spouse has a low credit score for late payments, bankruptcy or whatever reason, you will want to think twice before applying jointly.

You will either be turned down for the loan because of your spouse’s poor credit score, or you will have to pay a higher interest rate.

And your own credit score will suffer, Tucker adds.

If you can apply for a mortgage on your own, however, your spouse’s credit history legally cannot be taken into account unless you are relying on your spouse’s income to assist with getting the loan and paying the bill, the family economist explains.

If your spouse’s income is needed to buy the home and you cannot get a loan, or you feel the interest rate is too high, your spouse’s credit history needs to be repaired by paying bills on time and no longer accumulating debt.

Also, pay off accounts that have been maxed out or that have high balances.

This could take some time, however, since negative information can stay on your credit report for seven years (or 10 years if you have filed for bankruptcy).

Both of you should also check your credit report for errors before applying for loans.

This does not cost you anything, and studies have shown that a large percentage of consumers’ credit reports include incorrect information.

One consumer found that his father’s loans and other accounts were on his credit report, and he was denied a credit card because he appeared to have too much debt in relationship to income. He was shocked to be turned down since he had checked his credit report the previous year with one of the three credit reporting agencies –– and it was fine.

Yet, the incorrect information got onto his credit report in the meantime. He had to get his information corrected before he was able to obtain a credit card.

Tucker recommends ordering your reports simultaneously from each of the three major consumer reporting agencies – Equifax, Experian and TransUnion.

You can do so over the Internet, by phone or by mail.

To order online, go to www.annualcreditreport.com and follow the instructions to complete the request form.

By working online, you can view your score immediately. The report is kept open for you to read for up to 30 days.

To order by phone, call (877) 322-8228. You will go through a simple verification process over the phone; however, you will be requested to give your Social Security number, as well as other personal information.

Your reports will be mailed to you.

To order by mail, fill out the request form online and mail it to Annual Credit Report Request Service, PO Box 105281, Atlanta, Georgia 30348-5281.

For related family economics and consumer topics, click on the Family and Home link on the LSU AgCenter homepage at www.lsuagcenter.com. For local information and educational programs, contact an extension agent in your parish LSU AgCenter office.




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