You’re married now — congratulations! The wedding cake is gone, the thank-you notes have been sent, and your honeymoon tan is all but a memory. It’s time for you and your spouse to settle into your new lives together. Between deciding whose furniture to keep and whose relatives to spend the holidays with, you really should discuss your credit scores.
If your new spouse’s credit score leaves much to be desired, you’ll want to help him 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 him build his credit:
1. Make him an authorized user on your credit card.
An authorized user has the right to make charges on a credit account, but he can’t make changes to the account and doesn’t have to make payments. If you add your spouse as an authorized user, you can help him build up his credit with your good credit habits. Just make sure your issuer reports authorized-user activity.
Your significant other can either use your credit card or you can have the issuer send you a card with his name on it. Otherwise, you can use the card normally and build up his score without him making charges.
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 him 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 if you want to point him in the direction of a good starter card.
Why does your spouse have 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 has no credit because he didn’t previously understand the importance of having credit, educate him on the factors that determine your credit score and how to improve each of these factors.
On the other hand, if he has bad credit, you’ll need to determine whether his financial habits have changed. Otherwise, it’s risky to add him to your credit accounts at this time. Work together to improve his financial and credit habits in order to get on the same page. Financial compatibility will make your future together less stressful.
Young couple building together image via Shutterstock.