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Articles » Fico Score | | Tips On Managing Your FICO Score In Married Life |
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Marriage has often been described as a joint business venture and, in many ways, it is. When you get married, you combine your assets and liabilities with a spouse and that can affect the credit rating of both partners. Whether or not this is a positive thing is determined by your actions. Bills such as mortgage payments, credit cards, car payments, and even utility payments are logged on your credit report and can lower or increase your FICO score .
The first and most important tip is to pay your bills on time. When you take out a line of credit for a new home or car make sure that you can afford the payments before you sign any paperwork. Remember that you need to project on two incomes, yours and your spouse’s, so you need to look at the amounts and stability of those incomes before entering into any type of credit agreement.
Another trap that many married couples fall into is department store credit cards. If these are joint accounts, the actions of one partner can affect the credit score of another. These also count as open lines of credit. Most lenders use a 20% rule when determining if they will grant additional credit to an individual or couple. If one spouse in a marriage has open lines of credit that exceed 20% of his or her income, it could affect the interest rate and the decision to grant the loan.
Calculate your debt and your payments using both of your incomes individually and also the total household income. Be familiar with the factors that affect your credit rating and FICO score . Overall debt, late payments, defaulted loans, and even inquiries can lower your FICO score, so discuss all credit decisions before you make them final. Teamwork is the key to keeping your scores high and your purchasing power where it needs to be.
To build positive credit and improve your FICO scores , pay your monthly mortgage payment on time, pay credit card balances off in full, and get rid of any credit cards that you don’t use. Add up all the open lines of credit you have (the credit card limits) and divide them into your annual income. Make sure that the number is below 20%. This is your short term debt and is a big factor when lenders make a decision to give you more credit.
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