Getting Married? 5 Things You Need To Know About Credit Before Tying The Knot

Maybe you’re thinking about popping the question. Or maybe you’ve already said yes to marrying the love of your life. Getting engaged is an exciting and wonderful time. While you’re planning your wedding, it’s also a good time to start planning your future together. 

That means you have some big decisions to make. Where do you want to live? Will you buy a home or rent? Should you get a joint bank account? What about buying a car?

Understanding how credit scores and reports work can help you make big financial decisions.

What is a credit report?

A credit report is a summary of your credit history, reported to one or both of the credit bureaus in Canada by lenders, creditors and other sources. Potential creditors and lenders may use the information in your credit report, among other information, when deciding whether to approve your credit application — and at what interest rate.

Your credit reports are tied to your financial history. That means your credit report will remain separate from your spouse’s. If you decide to legally change your name, you should also update your name on your Equifax credit report so your credit history will be associated with your new name. You can do this by filing a dispute with Equifax. Find out how here.

What is a credit score?

A credit score is a prediction of the likelihood you will pay your bills on time. Lenders can use many different credit scores to help them make decisions, including those provided by Canada’s two credit reporting agencies. Your Equifax credit score is calculated using the information available in your Equifax credit report at the time the score is calculated. The higher your credit score, the more likely you are to qualify for a loan and receive a lower interest rate.

Will my spouse’s credit scores affect my credit scores?

Your marital status is not a factor used to calculate credit scores and doesn’t appear on your Equifax credit report. When you get married, you'll still each have your own credit reports and scores. And any debt you've incurred before your marriage remains your own. 

Before saying “I do,” review your credit scores and reports to ensure all the information is accurate. You can check your Equifax credit score and report on myEquifax. If something’s not right with your Equifax credit report, you can submit a Consumer Credit Report Update Form. 

Should we apply for joint credit accounts?

If you and your spouse apply for a joint credit account, like a mortgage or car loan, lenders will likely consider both your credit profiles in addition to other information from your application. So if your spouse has poor credit or high debt, it can affect your odds of approval and may lead to higher interest rates. 

Once opened, joint accounts can appear on both of your credit reports. That means any late or missed payments on those accounts can negatively impact both of your credit scores. Similarly, any positive credit activity on these accounts can have a positive impact on your scores.

But being married doesn’t mean you have to apply for credit together. You can apply for a mortgage, a car loan, or other credit product entirely by yourself. This might be the best option if you have a good credit score and your spouse doesn’t. 

When we get married, will our bank accounts become joint accounts?

Your bank accounts won’t automatically merge upon marriage. If you and your spouse want to share your finances, you can apply for loans, credit cards, and bank accounts together. You can also add your spouse as an authorized user to your existing accounts.

Talking with your future spouse about your financial goals and priorities might not seem romantic, but it can help you start your marriage off on the right foot. Keeping the lines of communication open about how much money you’re earning and how much you’re spending is a great way to avoid any costly misunderstandings down the road.