When you get married, it affects many things in your life personally as well as financially. It may not have a direct impact on your financial circumstances, but it does affect your CIBIL score indirectly because of the actions of your partner. Your CIBIL score is not left behind from this effect if you are getting married to a person with low credit. You should know about a few things that you could use to have a great credit report to enable your spouse and you to get the loans and credit at the time of need. Both of you must have a financially disciplined living. Your spouse’s CIBIL score may affect you in the following ways:
Marriage merges two lives into one. However, when it comes to credit histories, each spouse retains their own personal credit profile when they get married. Marriage does not merge two credit profiles into one. By the same token, if a spouse incurs debt during a marriage or otherwise wreaks havoc on their credit, the other spouse’s credit does not necessarily suffer as a result.
While being married does not merge your credit with your spouse’s, being joint account holders can certainly cause one spouse’s actions to affect the other spouse’s credit. Many married couples decide to have joint accounts — for example, bank accounts, utility accounts, or credit card accounts, to name a few. On a joint account, typically all account holders are liable for the actions of one of the account holders. For example, if a husband and wife are joint account holders on a credit card and the husband is 30 days late paying the bill one month, a 30-day late negative item will most likely appear on the credit reports of both the husband and the wife. When two spouses apply jointly for credit, such as for a mortgage, the lender will consider both applicants’ credit histories when making the decision of whether to extend credit. One spouse’s poor credit history could result in denial of the loan or approval with a higher interest rate. For this reason, some couples may decide that only one spouse — the one with the better credit history — will apply for the mortgage.
Also, keep in mind the difference between an authorized user and a joint account holder. A joint account holder can use the account and is also liable for the debt. An authorized user can use the account, but is not liable for the debt. An account will appear on an authorized user’s credit report, but it may or may not affect his or her CIBIL score, depending on the type and version of the scoring model being used. The positive history from the account will appear on the authorized user’s credit report, but so will the negative history, so be aware of this when considering whether to become an authorized user on your spouse’s account.
The main thing to keep in mind here with regard to credit is that nothing changes automatically when two people get married. Each person retains their own separate credit profile and reports. The couple may take steps to open joint accounts together, add one spouse as an authorized user or joint account holder on an existing account, or apply for loans together, but they may also choose not to do so. Each couple should consider the risks and benefits of opening joint accounts before taking this momentous step.
When you get married, it does not have an direct or immediate impact until you hold individual credit cards and accounts.
When the CIBIL of your spouse is low
The CIBIL of your spouse may not pull down your CIBIL score. However, when you plan to apply for a joint loan, the bank may charge higher interest on it.
When the CIBIL of your spouse is high
If the CIBIL score of your partner is higher than your score, it will not improve your CIBIL. In fact, you may have to pay higher interest when you apply for a joint loan.
Most couples hold a joint account. If your spouse does not show responsible behavior to pay his/ her debt, it may be a pain for your CIBIL score in case you hold a joint account. In order to protect your rating, you can take a few measures. For instance, do not endorse for joint agreements, restrict authorized users, keep your individual checking account, etc. These measures can help you maintain a good CIBIL score and control your finances.
Applying for joint loan
Like all other aspects of your life, marriage may give you great synergy for financial managements. Although both partners should maintain individual CIBIL score, you can depend on your partner’s CIBIL score when in times of need. When you apply for loan jointly, the bank considers the CIBIL rating of both partners. In most cases, couples do take a joint loan because of its advantages such as you can get more amount of loan jointly, have tax benefits, and the responsibility of repayment is shared.
These tips are helpful for women a few years after their marriage:
If you are going to change your name after marriage, you must inform about the same to all the concerned institutions such as banks, credit card issuers, passport office, CIBIL, lenders, etc. It will make sure that these institutions make necessary changes in your records. Your credit rating will be maintained with your new name.
You should not surrender all the credit cards and close the bank accounts held in your previous individual name and choose to have only one joint account or have an add on credit card. You should maintain your own CIBIL score and have your individual bank accounts, credit cards, which can prove useful for you in future. In case of an unfortunate event in your family, if your partner is not able to maintain his CIBIL, your credit rating may prove beneficial. You can take small loans and keep them going rather than prepaying them to maintain your CIBIL score.
If you do not possess your separate credit trail, you must start it after marriage. You can take a personal loan for six months and pay it responsibly to establish your good credit behavior.
I don’t think anyone gets married with any thought of someday getting divorced. The reality is, though, that even though the divorce rateamong young adults has dropped over the past couple decades, it’s still relatively common for couples to experience divorce.
If you find yourself facing this situation, it’s good to know what impact divorce can have on your CIBIL score and credit accounts.
Experian recommends that you take inventory of all shared accounts and credit responsibilities with your ex-spouse. Once you have an idea of all the credit cards, car loans, bank accounts, mortgage(s), etc. that are listed in both of your names, work to separate these into each person owning accounts they are responsible for.
Until you finish removing the appropriate spouse from all accounts, you are both responsible for making payments on those accounts. For example, if you have a joint home loan and you moved out of the house, but your spouse stops making payments, you are legally liable for the payments until the credit is changed to just their name.
As ugly as some splits can be, making sure you are both carefully reviewing accounts and finances will help ensure that you both start your new chapter on the right foot.
One of the toughest parts of divorce is that your CIBIL score had been shaped by joint accounts previously and that history carries over into your lending decisions for at least the short-term. Establishing your own account and making payments on time will help you quickly set up your CIBIL score to a comfortable number.
One of the quickest ways to repair your CIBIL score is to make your payments on time. However, if you have negative marks on your credit report that you aren’t sure how to remove or repair.
Addressing your credit report and work that may need to be done to improve it can seem overwhelming, but it doesn’t have to be. Getting help to repair it or taking positive steps to improve it now can help you whether you are single, engaged, or married.
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