Does getting married change your credit score?

Getting married is meant to be one of the happiest times of your life, so it goes without saying the last thing you’ll be thinking about is how your credit score comes into play. But before you walk down the aisle, it may be worth considering the impact marriage could have on your personal finances and your credit history.

Can getting married impact my credit score?

Short answer, no. The act of getting married should not help or hurt your credit score. The individuals in a relationship will not suddenly have their financial history merged.

This can be important to know if one party has had negative financial events in the past, such as defaults or even bankruptcy.

Your credit score and credit history are a personal, individual assessment of your creditworthiness. However, there are aspects of marriage that may impact your credit score, including:

• Joint credit cards

Taking out a credit card together may be one of the earliest forms of merged finance a couple undertakes, after a joint bank or savings account. And just like with any financial application, applying for a joint credit card will impact your credit history.

Firstly, the financial history of each member of the relationship will be assessed, and if one or all credit scores don’t meet the credit issuer’s eligibility criteria, the application may be rejected – which may hurt both credit scores.

Secondly, if the couple are approved for a card, they are both responsible for meeting repayments. If one person is constantly overdrawing or maxing out the card (and if the other does not know) this can cause significant financial and relational stress come statement time. It’s invaluable that the couple are on the same page about credit card usage and repayments.

Finally, it’s worth noting that if one person in the relationship has a less-than-average credit score, a joint application can be one way they’re able to qualify for credit. And, if repayments are made on time and the card is used responsibly, it may improve this individual’s credit score thanks to the positive behaviour.

• Joint loans

First comes love, then comes loan application to finance a wedding. Nowadays, it’s not uncommon for long-term or married couples to take out joint loans together, particularly if trying to afford the serviceability requirements on a property in the major capital cities.

Whether you’re considering a personal loan, a car loan or a home loan, this process may impact your credit score. This includes all the reasons listed above for credit cards, but it’s also worth taking into consideration the loan term.

If a couple is taking out a personal loan, on average they’re looking at repayments over two to five years. And if they’re considering an owner-occupier home loan, that’s at least 25-30 years of financial responsibility (unless selling earlier). It goes without saying that before a couple applies for this type of finance, they set a strict budget to meet repayments over a term of many years, if not decades.

It also goes without saying that not all relationships will last the test of time. It’s worth communicating honestly about what the worst-case scenario could look like before signing on the dotted line, and how you both plan on servicing a loan, or selling an asset, if you were to separate. If one person no longer wants to meet loan repayments, and you cannot come to an agreement, this will significantly impact your credit history if a default were to occur.

• Name changes

It’s also worth taking into consideration that if one or both parties change their surnames, your credit history will then be listed under your new name.

Changing your surname does not erase your credit history. If negative events on your credit history is something you are struggling with, there are practical steps you can take, including:

• Checking your report for mistakes;
• Working off your existing debts; and
• Avoiding late payments with calendar reminders or direct debits.

What can married couples do to prepare for shared finances?

It’s important to note that combining finances may not work for your relationship. It’s not a compulsory decision.

It’s clear that the most important thing a soon-to-be married couple can do if they’re worried about their credit score and personal finances is to have an open and honest conversation about money beforehand. Establish your expectations, including spending limits, savings goals and how you both like or don’t like to budget early on. This may help to alleviate any financial stresses or surprises down the line.

If you do want to share your finances or make joint financial applications, you may want to start small with a joint bank or savings account. There is very little risk of hurting your finances with this type of product, outside of overdraft fees if you withdraw more than your balance.