The wedding is over, and you’ve enjoyed a blissful honeymoon. Now it’s time to enjoy life with all the joy that marriage can bring as well as its many challenges and decisions. While discussing your finances may not be as romantic as, say, a quiet dinner in a fancy restaurant, it should be high on your priority list. Doing so will not only help you avoid potential confrontations in the future but also help ensure that your credit remains strong for your entire marriage. Here’s a look at some things you can do to build your credit that will help protect your financial future.
Know Where You Stand
An important first step when it comes to credit is knowing where you stand. Both of you should obtain a copy of your credit bureau report to ensure that the information it contains is accurate and up-to-date. Dispute any inconsistencies on your report before you apply for an important loan.
Note: Credit histories will not be combined when you marry. Your individual accounts will remain your own; however, jointly-held accounts for which one spouse is an authorized user on the other’s account will appear on each credit report. Opening joint credit cards can be tricky because “bad” financial behavior by either spouse will hurt both of your credit scores.
Pay Bills On Time
Late payments have a negative impact on credit scores – there’s no getting around it. Communicate with each other to make sure bills are getting paid on time, all the time. Creditors and lenders will note your responsible credit habits.
Maintain a Reasonable Debt Load
Lenders will notice if a large portion of your income each month is used to pay debt payments. As a general rule, financial experts say that debt payments (non-mortgage debt payments, that is) should not exceed 10 to 15 percent of your monthly income. Consider ways to pay high credits down before you apply for new credit.
Don’t Make Too Many Inquiries
Limit the number of cases in which you authorize a creditor, business, or employer to check your credit report. If you make a large number of inquiries over a short period, lenders may interpret it as a sign that you’re overextending yourself by taking on additional debt. An inquiry usually remains on your account for two years.
Be Cautious in Canceling Credit Cards
Tempting as it may be, closing old credit accounts can have a negative impact on your credit score. Why? Doing so can increase your debt-to-credit limit ratio. On the other hand, closing accounts may improve your score if too many accounts are giving you high potential debt.
Open a Revolving Account
How well you manage a revolving account – such as a department store card or bank card – is a strong indicator of how you will manage new debts. Unlike an installment loan in which you pay a fixed amount each month, you manage a revolving account by determining how much you charge each month and how high you let your balance build.
Peoples Bank is a true community bank that will work with you every step of the way to ensure that you’re on the right financial track throughout every phase of your marriage. We are “People That You Know,” and we are honored to be your local bank.