Don’t worry too much if your Valentine discloses their credit score is in rough shape this weekend — their bad credit isn’t technically contagious.
“Everyone has their own credit report, so your significant other’s credit history won’t be combined with yours,” Rod Griffin, director of public education for Experian, said in an email. (And, yes, this tenet is true for folks that have formally tied the knot as well.)
But that’s not to say you’ll never incur any collateral damage as a result of your beloved’s credit woes. While you won’t formally inherit the credit score of your significant other or spouse, you may have to endure some of the consequences of their bad credit scores — or their bad habits — together, said Thomas Bright of ClearPoint Credit Counseling Solutions.
An Indirect Hit
For instance, let’s say you and your loved one decided to apply for a mortgage. And “to get financing for the house that you want to buy, you need both incomes,” Bright said. In this case, lenders are going to look at both of your credit scores — and your significant other’s not-so-hot credit will likely result in less favorable terms and conditions.
A more expensive mortgage subsequently could mean “there’s a much higher chance that one month you’re going to miss a car payment or have to carry a higher balance on your credit card,” Bright said. And those items would negatively affect your credit.
Keep in mind, too, any joint account you elect to open with your loved one will appear on your credit reports.
“If you open a joint account you share full responsibility for the debt with your significant other,” Griffin said. “If he or she abuses the account, you could be left with a damaged credit history. If you add your significant other to one of your accounts, they could hurt your credit by abusing that privilege.”
Building Better Credit Together
But that’s not say you should run for the hills anytime a suitor reveals their credit score is hovering below 600. After all, there’s a chance your good credit could ultimately rub off on them.
For instance, “if you both use the [joint] account responsibly, it could help both of you build strong credit histories, too,” Griffin said.
Remember, when it comes to love and money, communication is key.
“With taking on any debt, you need to weigh the pros and the cons,” Bright said. “Sit down to budget together. Take a good hard look at what the numbers are.”
If you have a really good plan in place and the communication is there, a move like opening a joint account or adding your significant as an authorized user to your credit card “could be a really great tool to rehabilitate their credit,” he said.
You can keep an eye on your credit — and the effect any joint accounts may be having on them — by pulling your credit reports for free each year at AnnualCreditReport.com and viewing your credit scores for free each month at Credit.com. If your significant other needs to fix their credit, they should correct any errors on their credit reports, pinpoint the factors holding their scores down and focus on adding a positive credit history. You can also both potentially improve your credit scores over the long term by making all payments on time, keeping credit card balances low and sparingly adding new lines of credit.
More on Credit Reports & Credit Scores:
- What’s a Good Credit Score?
- How Do I Dispute an Error on My Credit Report?
- How Credit Impacts Your Day-to-Day Life