Savvy consumer: Your honey and your money? Pooling isn't always best
The fact that you're married doesn't mean your finances should be merged.
Many of us go into marriage wanting to share everything, bank accounts and all. But Good Housekeeping financial expert Carmen Wong Ulrich advises that there are parts of your financial life that should not be pooled and that if they are they ought to be pulled apart.
Here are some useful strategies for managing finances after marriage:
Your credit reports and scores
What to keep separate • When you get hitched, you don't have to "marry" your partner's credit. Your credit (or FICO) scores and history are always yours and yours alone and that's a good thing.
Think of your credit report as your own grown-up GPA. It's how everyone, from lenders to employers, gauges you as a financial risk. And if you and your spouse ever split up, having your own credit will mean having the freedom to build a new, solo life.
If you've been an authorized user on your spouse's credit cards, it's time to get credit under your own name. If you have no credit history or a low credit score, get a secured card you deposit money to activate it such as those at nerdwallet.com.
What to merge • Many couples want to buy things say, a home or a car jointly, and this is a time your credit scores do get connected. When both of you have great credit especially if those numbers are close to or higher than 760 there is little credit-related reason to apply jointly, because you'll qualify for the best rates.
But if, say, your spouse wants to buy a new car and has a cringe-worthy credit score, while yours is A+, your good credit may help. Let's say you have a FICO score of 815, and your partner's is 650. If you apply together, lenders will look at both those scores and probably go with the lower of the two. Because yours is particularly stellar, they may offer a rate that's a bit better than what a score of 650 would get you, which would in turn ratchet down your monthly payments. Every penny counts.
That said, beware of co-signing loans that you can't pay on your own, in case you divorce or someone loses a job. Need third-party advice on navigating this? Contact a local nonprofit credit counselor via the National Foundation for Credit Counseling (nfcc.org).
Keep them separate • You and your spouse might have gotten a joint will when you had kids, but these documents have fallen out of favor through the years because they make things more complicated in this era of divorce and remarriage. If you wed today, a lawyer will almost certainly recommend individual wills, which are more flexible down the road. Yours and your spouse's plans for your estate can be identical or entirely dissimilar; it's your call.
Your partner's debts
Will you share your partner's debts if you divorce? Not necessarily if your spouse acquired the debt and it's only in his or her name in most states, that is. If you live in a community-property state, the debt your spouse is racking up generally is deemed a shared responsibility, no matter whose name it's in.
To contact a local nonprofit credit counselor
Online go to the National Foundation for Credit Counseling at nfcc.org
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