You’re married now — congratulations! It’s time for you and your spouse to settle into your new lives together, which means handling finances together.
If your new spouse’s credit score leaves much to be desired, you’ll want to help your partner build it up as soon as possible. It’s important that both of you have great credit scores and don’t need to rely on your score alone. Here are three ways to help build credit.
1. Make your spouse an authorized user on your credit card
By someone as an authorized user on your credit card account adds your credit history to their credit report. The effect is most powerful when you add someone to an account with a great record of on-time payments. Make sure your card issuer reports authorized users to the credit bureaus.
The credit-building effect works even if you don't give the authorized user a card to carry and use. Your good credit habits — keeping balances low and paying on time — build the credit history of you and your partner.
2. Open a joint credit account together
While we don’t recommend joint credit cards, a short-term joint credit account may be a good idea for helping your spouse build credit. However, you still need to remember the risks — in the event of divorce, joint accounts can be difficult to separate. That said, this is still an option for joint assets, like a vehicle or personal loan — but keep it short term, preferably three years or less.
3. Have your spouse apply for a secured credit card
Secured credit cards are a great option for people with bad or no credit. A secured card is backed by a cash deposit equal to or less than the credit limit. Your spouse will still make payments on the card each month, but the issuer doesn’t take on as much risk because the bank already has the cash. Here are some of our favorite secured credit cards.
Understand why your spouse has bad credit or no credit
Ideally, you and your spouse determined that you were financially compatible before saying “I do,” but if not, it’s a discussion you should have now. If your spouse needs your help building credit, it’s a safe assumption that he either doesn’t have a credit history or has a poor credit history. But why?
If your spouse didn’t previously understand the importance of having credit, you can offer information on the factors that determine your credit score and how to improve each of these factors.
On the other hand, for someone with bad credit, it's wise to check whether those financial habits have changed. Otherwise, it’s risky to add your partner to your credit accounts at this time. Work together to improve financial and credit habits in order to get on the same page. Financial compatibility will make your future together less stressful.