Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006).
Dear To Her Credit,
My credit is good. Unfortunately, my fiance has
approximately $150,000 in debt caused by his ex-wife. We would like to get
married, but we do not want his financial upheaval to damage my credit.
Will a prenuptial agreement help? How do the credit card
companies look at a new wife taking the name of her husband with horrible
credit? Thanks. -- Danielle
Dear Danielle,
Don't let old baggage from your fiance's ex keep you from becoming
happily married. If you're careful, your husband's old credit history and debt
shouldn't hurt your credit at all.
Every person has his or her own credit history and credit score.
There is no such thing as a joint credit report, and getting married does not
cause any of his pre-existing credit items to show up on your report. His debts
do not automatically become yours. Nor do credit card companies care whether
you take your husband's name when you get married. A month after you get married, you could [%Link?type=article&id=1775&text="apply for a credit
card under your new name"%] and nothing should be
any different from what it would be today.
The danger, then, is not that his past financial problems
will automatically become yours. Just remember to be wary these situations:
Major
joint purchases: If you want to buy a home together and you need both of
your incomes to qualify, his credit score could keep you from being approved or
cause you to pay a higher interest rate.
Dealing
with debt: If the burden of your new husband's debt payments makes it
harder for you as a couple to keep up with all your other bills, your credit
will suffer.
Poor
financial habits: If (and I hate to think of it) it turns out the debt
wasn't 100 percent the ex's fault, but in fact, money management is not your fiance's
strong point, that can affect you, too. That doesn't mean you shouldn't get married -- many wonderful people are still in the "learning phase" of
personal finance.
Creditors:
Even though legally you shouldn't be liable for debt that preceded the
marriage (even in community property states), that doesn't mean a creditor
won't try to make you pay.
Prenuptial agreements are generally contracts that go into
effect if you ever get divorced or when one of you dies. If you have
significant assets, for example, and he only has significant debts, a
prenuptial agreement could state that in the event of a divorce you keep the
assets you brought into the marriage. If you think a prenuptial agreement is a
good idea, look for a lawyer who deals specifically with that area, such as a
family law specialist. However, a prenuptial agreement is not the best way to
protect your credit score during the life of the marriage.
If you are worried about being left with your future husband's significant debt if he dies, especially if you have substantial assets the creditors may try to go after, seek the help of an attorney. This area of the law can be complex and qualified legal advice is well worth the cost.
Your goals as a couple must be to pay off the debt and
restore his credit as soon as possible. In the meantime, keep your financial
accounts mostly separate. Adding him to your credit cards won't affect your
credit as long as you keep the account in good standing, but don't add your
name to even one of his accounts that has a history of "financial
upheaval." If you do, that card's history will show up on your report!
I urge you and your fiance to make sure you on
the same page financially. Consider reading money management books, going to a
local personal finance seminar or seeing a credit counselor. This is the
perfect time to start dreaming and setting goals. Make sure financial problems don't get in the way of
your new and exciting life together.
Sally Herigstad answers questions about credit every week for CreditCards.com. Herigstad is a certified public accountant, author and speaker. She also writes regularly for MSN Money, Interest.com, Bankrate.com and RedPlum.com, and has been a guest on Martha Stewart radio and other programs. You can read more about personal finance and download free budgeting worksheets at her website: www.sallyherigstad.com
To Her Credit answers a question about a debt or credit issue from a CreditCards.com reader each week.
Send your question to Sally.
Published: August 6, 2010
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