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Financial Literacy for Everyone

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June 28, 2018

Like many others, when my wife and I got married, we decided to intertwine our finances along with the rest of our lives. For most couples, opening joint bank accounts and buying a car or home together is the norm. However, even after decades of living together and leading similar financial lives, spouses may find out their credit scores are different.

Why Might Your Credit Score Be Different Than Your Spouse's?

There are two primary reasons that your credit scores could be different from someone else's – spouse or not. Either the underlying information in your credit reports is different, or different credit-scoring models are creating the scores.

Marriage and your credit. First, let's quickly clear up a few misconceptions about marriage and credit. There was once a time when your marital status was part of your credit report and being unmarried or divorced could make it more difficult to get a loan or line of credit. That's no longer the case.

Now, your marital status isn't included in determining your credit score. It's illegal for creditors to discriminate based on an applicant's marital status. Since your credit score is entirely dependent on the information in your credit report, your score isn't directly affected by your marital status or your spouse's credit. Your credit also won't change if you decide to take a new last name, but both names could appear on your report.

Now, to understand how or why you and your spouse may have different scores, there are two main factors to consider: the credit report itself and the scoring model used.

Your credit reports aren't identical. Consumer credit scores depend entirely on the information that's in a person's credit report. Therefore, if you and your spouse have a different score, it could be because there is different information in your respective credit reports.

The differences could be a result of a loan or credit card that you took out individually. Even if you closed a credit card five years ago, it could still be on your credit report and impacting your scores. Unless your spouse was a cosigner on the loan or an authorized user on the credit card, it won't show up on his or her report.

The credit bureaus are competitors and generally don't share information with one another. As a result, your credit reports could be different, and your credit scores could vary depending on which credit report gets used as the basis for the score.

You're looking at different credit scores. In the unlikely event that you and your spouse have identical credit reports, you could still have different scores depending on the credit-scoring model used.

Similar to the way in which major credit bureaus compete to create accurate credit reports, some companies compete to develop credit-scoring models.

If you're looking at your credit score from Credit Score Company A based on your credit report from Credit Bureau Company A, but your spouse is looking at a their credit score from Credit Score Company B based on his or her credit report from Credit Bureau B, then your scores may be different.

Making the most of your credit scores. Having different credit scores isn't necessarily a cause for concern. It's not even uncommon for one person to have several different scores.

Rather than worrying about who has a higher score, try to learn about and understand the factors that will impact both of your scores. Then you can take steps to improve both of your scores, such as paying bills on time and only using a small portion of your available credit.

When it comes time to apply for a loan or credit card, knowing which of you has a healthier credit history and higher scores could also help you strategize how to proceed. For example, only one parent needs to apply if you're taking out a federal student loan to help a child pay for school. Although a credit score isn't considered, the applicant's credit history is, and an adverse credit history could disqualify you. Therefore, you may want the parent with the cleaner credit history to apply.

As an additional example, if you're looking to open a new credit card with a 0-percent introductory offer to finance a large purchase, having the spouse with the higher credit score apply could increase the chances for approval.

Bottom Line: Although getting married won't have a direct impact on your credit, couples' financial lives often become intermingled, and each partner's credit could be important to the relationship's finances. Tracking your scores, understanding what can influence your scores and taking steps to improve your scores can put you in position to make informed financial decisions together.

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This article is intended to provide general information and should not be considered health, legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

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