Does Marriage Affect Your Finances?
A wedding is a union of souls—and occasionally, of bank accounts.
For all the romantic connotations of a phrase like, “Til death do us part,” the truth is getting married is a commitment to facing the humdrum realities of daily life together. That means sharing joys, sorrows, and, yes, financial responsibilities. If you’re considering a walk down the aisle, first talk with your partner about how you will navigate life’s financial challenges together.
Consider the following questions:
Does getting married affect your credit report? If so, how?
The short answer is no, getting married won’t affect your credit report directly. You and your spouse will each continue to have individual credit histories and scores, tied to your respective Social Security numbers. Even if one or both of you choose to change your names, it won’t affect your credit. You don’t even need to notify the credit bureaus about your name change.
The long answer is more complicated. While marriage itself won’t affect your credit, taking on financial responsibilities together—including loans, debt, and joint accounts—will have an impact. If one spouse has a less-than-stellar credit history, that may impact whether creditors will approve a joint loan or credit card and how high the interest rate is. That’s why it’s important to discuss your credit and financial records together before you tie the knot.
What if one spouse has bad credit?
If one spouse’s credit score is not as healthy, the first step is triage. Get a handle on the situation by obtaining a copy of their credit report, identifying the problem, and creating a plan. Are late payments dragging their score down? Set reminders to make sure the payments are on-time in the future. Are they carrying a considerable amount of debt? Lower their credit utilization by reducing credit balances to under 30% of the limit. Over time, this may help to improve their score.
In the meantime, you might consider keeping your accounts separate. As a couple, decide how you want to approach credit-based applications. Can you afford for the spouse with better credit to apply for loans and credit cards alone to get better interest rates? Or would you rather apply jointly and accept higher interest rates to raise the lower credit score? Every couple’s situation is unique, but no matter your circumstances, communication is key.
Is your spouse responsible for your student loans?
It depends. As a general rule, each person is responsible for the individual debts they accrue prior to marriage, including student loans. That means, while married the other cannot be compelled to repay a prior debt of a spouse. However, if you cosign student loans with your spouse, it doesn’t matter whether you took the loan out before or after marriage. You’re both equally responsible for the debt.
If you take out individual student loans after getting married, things get even more complicated. Depending on what state you live in, laws regarding community property will vary. Some states consider student loans taken out during a marriage to be marital property and, therefore, a shared responsibility.
What are the financial benefits of marriage?
There can be many financial benefits to getting married, depending on your individual circumstances and should be discussed with your financial adviser or personal accountant. Under the current tax system, couples with unequal earnings may benefit from filing jointly in a lower tax bracket or even receive a marriage bonus. Spouses may also be able to take advantage of their partner’s unused tax deductions.
Insurance is another major financial benefit for married couples. Spouses can choose whose employer offers better health insurance options and often receive discounts on long-term care, home, and auto insurance.