While advice like “never go to bed angry” and “always make time for each other” are great tips for newlyweds, credit should also be part of that conversation. These credit tips will help newlyweds steer into their shared lives as they make smart credit decisions together.
Credit isn’t sexy.
If you’re getting married this year, chances are you’re more concerned with setting up a new home or selecting a honeymoon destination than discussing the finer points of credit.
And that’s exactly as it should be.
But somewhere in between all that last-minute wedding prep, set aside a slice of time to talk about your credit and credit cards, too. Because the way you and your spouse use credit will have a big impact on where and how you live.
If you’re getting engaged or married soon, here are 10 things you need to know right now about credit and credit cards:
10 credit tips for newlyweds
- Both credit histories are important
- It pays to be practical with cards
- Set your limit for cards and cash
- It can be smart to keep your old credit cards
- Applying for a lot of credit could hurt your score
- Difference between joint account holders and authorized users
- You need a plan for debt
- You don’t have to do everything all at once
- You can set a date to talk
- It’s OK to figure it out as you go
1. Both credit histories are important
You’re two individuals with two separate credit histories. And that doesn’t change with marriage.
What does change: Both histories are important when it comes to purchases you make as a couple.Too many times, couples dismiss concerns about one partner’s bad credit by saying they’ll just use the other partner’s good credit when they buy a home, says Jill Gianola, CFP, owner of Gianola Financial Planning and author of “The Young Couple’s Guide to Growing Rich Together.”
However, if you want both individuals and incomes on the loan, both credit histories have to be included, too.
And a mortgage isn’t the only part of your life that poor credit will affect.
“I think people forget how much a bad score can ripple through your life,” says Gianola.
It can increase what you pay for home and auto insurance. It can also prevent you from renting, obtaining phone or cable service and getting certain jobs.
Gianola suggests that during the engagement, or as newlyweds, “pull [both sets] of credit scores and credit reports and share them.” That way, you each see what future lenders will see. And you can make plans for fortifying any deficiencies.
2. It pays to be practical with cards
Credit cards are meant to be a convenient way to pay, not a short-term loan. And if you want to build and maintain excellent credit, it pays to use them that way.
“The key is don’t charge something if you can’t pay it off at the end of the month,” says Michelle Singletary, syndicated columnist and author of “Your Money and Your Man.”
Paying an annual fee? Do the math on what you’re getting in return for it.
“A lot of people live and die by their rewards, and that’s fine,” says Singletary. “Just make sure you’re actually getting benefits that exceed that annual fee.”
3. Set your limit for cards and cash
You’re sharing money and finances, so how much are you comfortable with spending before cluing in your spouse to a purchase? And how much are you comfortable having them spend without alerting you?
“Set an amount and negotiate,” says Singletary, who uses this strategy to this day.
“When we do anything jointly, there’s accountability.”
4. It can be smart to keep your old credit cards
Start closing card accounts and you can wreck your credit score. Especially if they’re some of the oldest accounts on your credit history.
That’s because the age of your credit history is important. And the longer you’ve had credit, the better for your score.
Also, credit scores analyze how much available credit you have versus how much you use each month. (Both for individual cards and your credit as a whole.) So, if you suddenly have less available credit, but charge and pay off the same amount (or more) every month, that could potentially hurt your credit score.
So, while you want to share bills and finances – and you may elect to open a joint card – it’s perfectly fine to keep your singleton credit cards, says Gianola.
“If you’re trying to build up your credit, it might be better to have your own credit card or your own loan,” she says. That way, you can use it occasionally for small purchases, pay it right off and build up that credit score.
It also lets you maintain a little independence and control.
“I’m my own person, even though we’re in it together,” says Gianola.
One way to be transparent with card bills if you’re not sharing cards (and even if you are) is to use apps and programs like You Need A Budget (YNAB) and Mint, says Gianola. You can link your cards and both of you can log in and see balances instantly.
5. Applying for a lot of credit could hurt your score
Applications affect your credit score for up to a year, so if you’re looking to buy a new home or car within that first year, you might want to skip applying for joint cards until well after you close on a mortgage.
Even if you don’t, keeping a lid on new credit applications (and applying for credit sparingly) is a smart strategy for maintaining a healthy credit score.
Gianola’ advice on credit cards: “Stick with the one you brought in and maybe get a joint one.”
6. There’s a big difference between joint account holders and authorized users
“If you add your spouse to your credit card account as an authorized user, the payment history for that credit card will show up on their credit report and affect their credit score,” says Chi Chi Wu, senior staff attorney for the National Consumer Law Center. “This can help their credit score if it’s a good payment history.” But if you’re late with payments, it could hurt their score.
“Authorized users are generally not responsible for payment on a credit card, except perhaps their own charges,” she says.
With a joint account, the account will be listed on both your credit histories – and both of you are responsible for the entire bill.
Being a joint account holder means each of you can be held solely responsible for the entire bill – not half. And it doesn’t matter who charged what.
7. You need a plan for debt
If one of you is coming into the marriage with a pile of loans or card bills, “that rates a conversation,” says Gianola. How did it happen? Was it a one-off or does spending routinely exceed income?
It’s also important to learn what your partner’s plans are for paying off that debt.
8. You don’t have to do everything all at once
One thing that fuels credit card overspending? The idea that you have to furnish that new house or apartment instantly. Or to get everything for the new baby all at once.
Instead, take the long view, says Singletary, who went through the same thing herself.
“I got a little crazy when we moved into our house for the first time,” she recalls.
“It would have been nice if people said, ‘It’s OK to take things slowly.’ You don’t have to fill the whole house when you move in.”
9. You can set a date to talk
“Pick a date in a couple of months or so,” says Gianola. “Mark it on the calendar.”
Look at it as a financial tuneup. “This is the date night we’re going to see how things are going,” she says. “Is this working?”
That way, you don’t have to wait for something to go wrong. And you have a ready-made pre-scheduled forum for broaching what isn’t quite working for you.
10. It’s OK to figure it out as you go
You tried sharing a card. Or tried using your own separate cards with total transparency. But whatever the strategy, it didn’t quite fit. Don’t be afraid to change it up until you find what works best for both of you, says Gianola.
“Couples do the best when they have shared goals and are transparent,” she says. “But you’re also an individual.”