What Happens to Your Credit Score if You Marry Someone with Bad Credit?

Your credit score is not affected when you marry someone with bad credit. Your credit score remains separate from your spouse's your entire life. The only time your spouse's credit will affect you is when you apply for joint loans. You do not have to apply for joint loans, but this is an option if you would like to co-own a home, car or other item.

What is a Joint Loan?

A joint loan is issued in the name of more than one person. Most of the time, the two people used are spouses. Most lenders require some formal agreement between the two applicants. This protects the lender against the possibility the two parties will have a falling out and need to exit the loan. Domestic partners are typically eligible for joint loans in addition to married couples.

Why use a Joint Loan?

With a joint loan, the incomes and assets of both people are considered in order to set limits. This means that two people can secure a much larger loan than one person alone could secure. Since most married couples split the burden of paying debts, applying together better reflects the way the loan will actually be paid between two individuals. 

How Does Credit Affect a Joint Loan?

Only the credit of the primary borrower is actually used to determine the interest rate of a loan. A primary borrower on a joint mortgage is whoever has the greater income. Therefore, if you marry someone with bad credit, your joint loan interest rate will not be affected at all if you have the higher of two incomes. This typically works well for couples because it is more likely the high income earner will have a better credit score. 

What if the High Earner has Low Credit?

If your situation is the opposite, you may have to reconsider how you apply for a joint loan. It is possible the highest earner has a lower score. For example, this is particularly common if the highest earner is a young doctor or lawyer who has only recently graduated school and has a large amount of student debt. In this case, your interest rate will be much higher than if the borrower with the low income and high credit simply applied for the loan himself or herself. Consider these options in this case:

  • Apply as a single borrower for a lower limit loan. If the two parties can save enough money for a large down payment on the loan needed, the lower limits will be less of a problem for you two. Then the higher credit borrower can be the sole applicant considered for the loan.
  • Work to improve the score of the low credit borrower before applying for the joint loan. It can take just a year or two to rebuild a credit enough that it will not significantly impact a loan.
  • Opt for secured loans in the short-run. Secured loans use collateral to reduce the risk of the loan and make credit score less important overall. Mortgages and auto loans are nearly always secured.

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