Bankruptcy Facts, Repair Credit after Bankruptcy, Philip Tirone

When it comes to marriage and credit, you have two choices: open joint accounts that appear on both spouses’ credit reports, or keep your credit separate. Many people erroneously believe that they should take the former approach, but keeping credit separate has its definite advantages. Following is the first of four considerations I will blog about over the next few posts.

Marriage and Credit Consideration #1: Joint Credit Cards

Though many couples are tempted to open joint credit card accounts, resisting this temptation has benefits. In the case of financial crisis, consider what would happen to each of your credit histories should you stop making payments on a joint account—both will be tarnished, but if you keep all accounts separate, you can be strategic about forthcoming financial disasters.

Let’s say your spouse loses a job, and you know you can afford to pay the bills only for a couple of months. You can transfer all of your credit card debt into your spouse’s name before you become delinquent. Hopefully, your spouse can find another job quickly, at which point your spouse will transfer your debt back into your name. But if not, you are positioned to protect your credit.

When the money runs out and you are unable to pay the bills in your spouse’s name, your spouse’s credit will suffer. Yours, however, will be protected. This means that you can continue applying for credit cards and loans while your spouse works on rebuilding credit.

Though this might seem like you are hanging your spouse out to dry, this is not the case. If you have a high credit score, your entire household can benefit from the loans you take out. And consider the alternative: if all of your accounts are jointly held, you will both end up with bad credit, and neither of you will qualify for loans during a transitional period.