Q&A: How credit utilization is calculated in a married couple's scores

For credit scoring purposes we remain single perpetually, but couples can boost each other's credit

Speaking of Credit columnist Barry Paperno
Barry Paperno is a freelance writer and credit scoring expert with decades of consumer credit industry experience, serving as consumer affairs manager for FICO (formerly Fair Isaac Corp.) and consumer operations manager for Experian. He writes "Speaking of Credit," a weekly reader Q&A column about credit scoring and rebuilding credit, for CreditCards.com. His writings about credit scoring have appeared in The Huffington Post, MSN Money, CBS Money Watch and other consumer finance websites.

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Question

Dear Speaking of Credit,
How is the credit utilization part of a credit score calculated when a married couple has some credit cards in both names and some in individual names? – Dorothy

Answer

Dear Dorothy,
Without realizing it, you’ve provided me with the opportunity to explain not only how a married couple’s credit information makes its way to each spouse’s credit reports and impacts their credit scores, but also to show how easy it can be to raise one or both credit scores when credit card accounts aren’t currently being reported in both spouses’ names.

A common credit reporting and scoring myth is that when you get married your credit reports and scores are combined into a single combined report and score.

Wrong.

If that were true, many married couples would have the same credit scores, which, as any married couple who has had their credit scores pulled for a mortgage can tell you, rarely happens.

In credit reporting, we’re all single forever
Married or single, each of us remains perpetually single at the credit bureaus with our own individual credit files, reports and scores.

For any credit scoring factors in any scoring system, whether it’s calculating credit utilization, payment history or otherwise, only information found in a consumer’s credit report can be included in that person’s score. 

The task then when addressing your question of how scores are impacted by some accounts being in one spouse’s name and some in both spouses’ names, is to understand what causes an account to appear on just one spouse’s credit report versus showing up on both.

Knowing this can enable a married couple to ensure their credit scores have the advantage of as much positive credit history to work with as possible.

So then, what determines whether a credit account – loan or card – will find its way to both spouses’ credit reports and scores? While applying to single consumers as well, typically the only requirement for reporting an account in a consumer’s name is for that consumer to be named on the account as one of the following:

  • Primary account holder. Only one spouse is responsible to the lender for the debt.
  • Joint account holder. Both spouses are equally responsible to the lender for the debt.
  • Authorized user. A spouse or anyone with permission from the primary or joint cardholder is permitted to use a card without being responsible for the debt.

Without being on the account in one of these capacities, the account won’t be on the spouse’s credit report or be reflected in her or his score.

Designation matters less than main scoring factors
Which of these designations (primary account holder, joint account holder or authorized user) is better for your score? For the 90 percent of lenders who use the FICO credit scoring model, it doesn’t matter. Essentially, the FICO formula includes any account that is part of the credit report being scored. VantageScore, the other major scoring system, doesn’t always include authorized users.

Once an account is on the credit report, the score will evaluate it according to all five of the scoring categories – payment history, credit utilization, length of credit history, new accounts and types of credit – without regard to how the card is held by the consumer.

This means, in regards to your question, that only those credit card accounts on which you appear will be factored in your credit utilization calculations. Only those credit card accounts on which your spouse appears will be factored in his/her credit utilization calculations.

Ways to maximize the scores of both spouses
How can a married couple maximize their scores when not all accounts appear on both credit reports? In the situation you describe, in which some accounts appear to be reported differently than others for the two spouses, the couple may be able to raise one or both scores by adding a spouse as an authorized user to a card for which the other spouse is the primary account holder. Here are three steps to take to do this:

  1. Obtain each spouse’s credit report by going to AnnualCreditReport.com. You can also get a free credit score from CreditCards.com.
  2. Identify which cards are held individually without an authorized user by noting which cards appear on one, but not the other’s, credit report.
  3. For those card accounts in good standing and appearing on just one spouse’s report, add the other spouse as an authorized user via a request to the card company by the cardholder.

Adding a spouse as an authorized user to a well-established card in good standing also can raise that spouse’s score thanks to the additional positive payment history and increased length of credit history being included, along with the balance, credit limit and other account information.

Thanks for the great question!

See related: 6 questions to ask when adding an authorized user to your card, 7 ways to boost your partner's credit score

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Updated: 11-17-2017