Building a Couple’s Credit

To Share or Not to Share Credit Cards

You’ve just gotten married, is it a good idea to share your credit cards with your spouse? It’s very easy to do. All that is needed is to add your spouse’s name as an authorized user on your credit card account. Then your spouse can do the same for you on their credit card account or you can simply cancel one set of cards. Once added to each others’ accounts the bank will send you new credit cards.

The question remains is it a good idea to add each other to your accounts? The number one cause of divorce is money problems. It’s important that the two of you have an agreement on financial matters. Ideally, this is something you should have settled long before you were married. If it’s something you’ve not yet addressed you should discuss it with your spouse now. You need to be in agreement as to how your credit cards are going to be used.

It’s ideal if the two of you have similar spending habits. However, if one of you spends a lot and the other spends little it could be a problem, especially if the person who spends a lot is irresponsible.

Credit monitoring agencies consider each of you separately. Even if you have shared credit cards you each still have your own individual credit history and credit rating. If you have good credit and your spouse has poor credit, then it’s probably a good idea to maintain separate cards.

If you have a joint account then it will be reported to credit agencies under both your names. So if you don’t handle the account well or pay bills on time both of your credit ratings will suffer. However, if you handle the account well, paying everything on time then it will help both of your credit ratings.

If you are simply an authorized user on someone’s credit card account this does not give you a credit history. Also, no matter how much you use a debit card it will also never give you a credit history. If you’re ever divorced or widowed you may end up with no credit history if you’ve simply been an authorized of a credit card account. A teenager who is an authorized user on their parents credit card account isn’t building a credit history.

It is important for the both of you to have an excellent credit history. Therefore, each person should have a credit card account that is solely in their name or they should be a joint holder on an account. Simply being an authorized user is not adequate.

One way to help build an irresponsible spouse’s credit is to have a joint account, but to destroy the card of the irresponsible spouse. That way your goods spending habits will increase your credit while the irresponsible spouse will not be able to damage the credit and will reap the benefits of your good habits in the form of an increased credit score.

If you ever jointly purchase a house with your spouse than when evaluating whether or not to give you a loan the bank will look at both of your credit histories. If only one spouse has good credit it is still possible for a bank to give the mortgage in the name of only one spouse. However, you will be able to get a larger loan if both of your incomes are added together, and this is only possible if both of you have good credit.

If you don’t have a credit card you should get one. The easiest way to build your credit is simply to spend conservatively and never carry any balance at all on your credit card. Pay off your entire balance every single month. This is ideal because it helps build your credit and at the same time you never have to spend any money on interest charges.