As a married couple takes their vows and embarks on a journey of togetherness, they align their dreams, life goals and financial goals to each other’s, too. A home, a vehicle, or a vacation — name it, and it will surely feature on their wish list. Today, easy access to credit is increasingly helping many couples realize their dreams faster than ever before. And one of the key factors facilitating this ease of access to credit is a high credit score.
So what happens when you get married? Does it affect your credit score in any way? The good news is that marriage does not impact your credit score. In fact, both you and your spouse will continue to maintain separate credit reports as well as credit scores.
Next, what happens if your credit scores are very different from each other? In cases like this, does the onus of taking credit lie on the shoulders of the partner with the better score? Or is it be better to focus on building better scores for both partners and then applying for joint credit? When it comes to your family, loved ones and partner’s financial goals, you don’t want to take a chance. You want the perfect score if it can help make your dreams a reality.
We need to be cognizant of the importance of credit in an era where credit plays a big role in shaping our financial future and influencing our life goals. And so, here are the top three things to consider before allowing loans, credit and finance to come between you and your spouse:
- Know the score before co-signing or applying for joint loans
If you are thinking of applying for a loan for your dream home or the latest car that you have your hearts set on, the question is who should apply for a loan and whether you should tackle it individually or in a joint manner? (After all, you have committed to do everything together now, haven’t you?)
Before applying for a joint loan or co-signing a loan with your partner, make sure you know each other’s CIBIL Score, financial obligations and credit habits, just so that you both know what you are getting yourselves into. This may include defaulted payments in the past, loans that you have availed of and even those that you are still repaying.
Tip: If applying jointly, ensure each of you has a CIBIL Score above 750. However, if one of you has a low credit score, refrain from applying for a joint loan until both have a CIBIL Score above 750. It may be better to take a loan individually (for the person with a higher score), or just wait, work towards building a higher score and then apply.
- Monitor each other’s credit utilization.
It is very easy to give in to the temptation of multiple credit cards and personal loans. Instead, keep a tab on your expenditure jointly, and remember that plastic money at your fingertips can be a great opportunity to build your credit profile, as long as you pay your dues on time. As soon as you notice a steep increase in credit utilization (or even the slightest hint of revolving credit), reduce your dependency on credit immediately.
Tip: Keeping one’s credit utilization to less than 30% of his/her entire monthly income works positively towards your credit score. This is also known as your EMI to Income Ratio and can help you calculate EMIs and credit dues.
- Monitor your CIBIL Scores and Reports regularly.
The best couples are those who inspire each other towards their life goals, and aspirations — financial and otherwise. While you keep a tab on your expenditures and savings, how about your credit scores and reports too? A high credit score can help you get access to credit when you need it the most. All you have to do is monitor it regularly, and ensure your partner does, too.
Tip: Monitor your CIBIL Score and Report regularly to ensure that you have access to credit when you really need it.