In what ways does getting married to someone with poor credit affect someone with good credit?

Question

Two middle class individuals, Jim and Jane, are dating.

Jim has a 715-730 credit score, as reported by Credit Karma, and has no problems (late payments, bankruptcies, etc) for the last 7-10 years.

Jane, on the other hand, has a 580ish credit score, as reported by Credit Karma, due to a combination of minimal credit history and outstanding school loans. She took out $100k in school loans, and then unforeseen circumstances prevented her from being able to work. The school loans are now 12-15 years old and have not been paid off. Jane has relied on Jim and so has no credit lines and few accounts to her name. She had a car loan from 2012 - 2014 at which time it was paid off early. However, she has some $200k in stocks and bonds which she lives off of.

Jim and Jane live comfortably, and have for a decade. Jim makes a good living and owns 25% equity in his current house, pays on time for his mortgage and car, and saves a reasonable amount of money via his 401k and IRA. Utilities and similar accounts are all in Jim's name, as is the house and car, to insure good rates and no deposits required.

Jim and Jane are considering getting married. However, they would also like to sell their home and build a new one in a few years. They will also need to continue to qualify for car loans, cell phones, etc. If they get married, in what ways will Jane's poor credit affect Jim's ability to provide for the couple? Will it change qualification for loans, deposits required on accounts, or other day-to-day, quality of life activities? Do Jane's liabilities become Jim's responsibilities?

In short, is marriage a practical option for them without first cleaning up Jane's credit?

Answer 1

I recently married a woman whose credit score was much worse than mine. It doesn't appear to have caused me any trouble.

Right after we married I took a bunch of money out of my savings to pay off several of her credit cards. This turned out to dramatically improve her credit score.

I turned my checking account into a joint account for the two of us. This doesn't appear to have affected anything. I also turned one credit card into a joint account. I checked with the bank first if this would reduce the credit limit on that card or anything, and they said no and it didn't. I could have just added her as an authorized user on the account, but by making it a joint account, it again improved her credit rating, because now her credit utilization is much lower.

We haven't applied for any new loans in both our names. I did apply for a loan (to refinance a debt she brought into the marriage) in my name only, and the fact that I am married to someone with a poorer credit rating didn't come up. (It occurred to me that if she divorces me, I have now turned a debt that was in her name only to a debt that is in my name only. Hopefully I won't have to find out what a divorce court would do with that!)

If you apply for a mortgage or whatever new loan, you might talk to the bank about whether you would be better off to put both your names on it or just yours.