I have a friend who recently got engaged. Last time we hung out, we had a little chat about his future plans. Being a financially savvy and provident guy, he did some research on the impact of marriage on future housing arrangement, and found out that in order to buy a house in the future he will have to have his future wife go through a credit score check. He was under the impression that his credit profile would be merged in some way with his fiance’s when they got married, and thus they would have a common credit score, taken as the lower of their individual scores pre-marriage. Is this true?
Well, being a very friendly and outgoing person, he asked two middle-aged people, a lady and a gentleman, sitting next to us in the bar that question, and was answered that no, he and his fiance will keep their individual credit profiles. And as it turns out, they have the backing of Transunion, one of the consumer reporting agencies (CRA’s)
“Even after you’re married, you and your spouse will have separate credit reports. The only way you will share your wife-to-be’s credit is if you open a joint account or co-sign a loan. For example, if you get a mortgage together and miss a payment-or make a late payment-that activity will show up on both of your credit reports. Same is true with a car loan or any credit card accounts you open together.”
Transunion’s response is consistent with what I found through my research. The answer is no, your credit profiles will stay separate. Also, your banking accounts and any other types of financial accounts will stay separate. Yay!!!
But this doesn’t fully address my friend’s concern. Ultimately, he wants to know if he and his fiancé will both need a high credit score for the purpose of getting a favorable mortgage rate. While everyone should maintain a good credit history, it’ll be better for them to just use the higher score between them to apply for a mortgage. Sharing credit profiles doesn’t sound good.
We learned from the same two helpful people at the bar that you don’t necessarily need to both co-sign a loan. This depends on the terms you negotiate with the creditor. While some creditors will insist that both the wife and the husband provide their credit reports, others will let the couple use either. Yes, you can apply for a mortgage on your own. Since I have never gone through this process myself, I’ll let you find out which institutions belong to the latter category. But keep in mind that the option exists; you’ll just have to look for it.
The bottom line is, yes, you can obtain a mortgage using just your own or your wife/husband’s credit. More importantly, my friend is a happily engaged man. Congratulations to him!!!
And best wishes to all other engaged/married couples!
-Richard (Hiep Tran)
Hiep's Finance 