Setting up a joint bank account to cover shared expenses is a pretty standard move for most couples, but things start to get a little dicey when credit cards join the mix. “Many consumers are confused about what happens to their credit when they get married,” says Ken Lin, CEO of Credit Karma.
Lin and his team have honed in on half a dozen of the most widely-held myths on the pros and cons of linking credit accounts.
Whether you’re married or not, you’ll definitely want to consider their points:
When I get married, we get a joint credit score. “Each person has their own credit score ’til death do you part,” Lin says. “However, when you open credit or loan accounts jointly, that information will be reflected on each of your credit reports, for better or for worse.”
Once I am married, we’ll share all accounts. There’s no switch that goes off the minute spouses step down the aisle together. You’ve got to do the dirty work yourself, which includes choosing the right credit card for both of you and designating one partner to manage bill payments: See 8 things to ask yourself first.
There’s a marriage tax penalty. “Just because you get married doesn’t mean you’ll pay more in taxes,” Lin says. “In fact, couples with disparate income (a large gap between the paychecks of the husband and wife) saw an average tax break of $1,300, according to the Congressional Budget Office. The office also reported that 51% of married couples paid less in taxes jointly than they would have if they were single, while 42% paid more.”
Since we’re married, we have to file for bankruptcy together. That’s another common misconception, Lin says: “Spouses may file a joint case; however, they do not have to file together. If only one spouse files, make sure you understand what property will be treated as part of the bankruptcy estate.”
It’s a bad idea to close joint credit accounts. It’s true that closing credit accounts might ding your score temporarily, but sometimes it’s the best option for couples hitting a rough patch. “For instance, if you’re getting a divorce, you should close joint accounts so you won’t be on the hook for your ex’s spending sprees,” Lin says. (You might want to cover your bases with a prenup, too.)
Our combined income will bump up my credit score. False. Income doesn’t even factor into your credit score at all. But if you’re going to add another piece of plastic to your wallet, having two incomes to support it will definitely help out in the long run, Lin says.
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