Credit Report Source

Will my credit score go down if I marry someone with a bad score?

Kimberly Lankford, the credit guru herself, answers this question in today’s “Ask Kim” section on Kiplinger.com.

Per Ms. Lankford.

“Not necessarily. There are no joint credit reports or scores, so getting married in itself won’t lower your score. But becoming a co-signer on an account with a bad history will tarnish your record. Lenders will look at both credit histories if you apply for a loan together. And the bad one could carry more weight. See if you can qualify for the loan with only one income, or wait to apply until your spouse’s score improves.”

In case you zoned out during the last paragraph (perhaps due to a hatred of Italic font): DON’T CO-SIGN AN ACCOUNT WITH SOMEONE WHO HAS POOR CREDIT HISTORY! It doesn’t matter who it is — your friend, significant other, or spouse — think it over before co-signing with anyone, loved ones included. In the wrong situation, co-signing an account could dramatically tarnish your credit record.

WARNING: Refusing to co-sign an important account with your spouse (due to her/his bad credit history) could be detrimental to you marriage. Side effects include: being forced to sleep on the couch, constant fighting, nagging, and in some rare cases, divorce.

But look at it this way; if and when you do become single because of a refusal to co-sign a loan with your (at this point, former) spouse, you will still have a strong relationship in your life — with lenders, because of your excellent credit score. This will greatly improve your chances of finding a hot date — as unlike the majority of trendy ways to attract singles out there, having good credit is always in season. In the world of single life, this could prove to be invaluable to you.

Personally, I think that co-signing a loan is never a good idea. Suze Orman, the best-selling author and Emmy award-winning TV host, agrees.

In other news, there was a great article — focusing on the recent credit survey conducted by the Opinion Research Corporation in association with the Consumer Federation of America and Washington Mutual — that appeared in the Washington Post this weekend. In my previous post on this blog, I discussed the survey in great detail. But Nancy Trejos, a veteran staff writer at the newspaper, puts me to shame in her column.

Per Ms. Trejos.

“The percentage of those who know the purpose of credit scores — to show their risk of not repaying a loan — rose only from 27 percent to 29 percent since 2005. The percentages of respondents who incorrectly believe that income, age and education influence their scores increased. In addition, many said they believe that their state of residence and ethnicity affect their scores. They do not. Their debt-to-income ratios, payment history and credit lines do. Perhaps most disturbing to those who commissioned the survey, only 24 percent know that the minimum score typically needed to qualify for a low-cost mortgage is 700.”

And Kimberly Palmer, a columnist for U.S. News and World Report, is reporting “credit scores are growing in importance.” Palmer’s article, which also discusses the recent survey, is a must-read for all you credit junkies out there.

Why do journalists from the nation’s most acclaimed newspapers and talking heads in the mainstream media constantly discuss credit history, reports, and scores? The answer is simple: establishing and maintaining a strong credit history is crucial to every person who desires financial security.

In the credit-driven world that we live in today, you need to know your credit score at all times. For access to a FREE Triple Credit Report right now, click here.

To avoid falling into the dreaded financial black hole — a low credit score — try to avoid the following factors, several of which consistently drive credits scores down.

Try not to:

File for bankruptcy:. It certainly isn’t rocket science — filing for bankruptcy will destroy your credit score. In fact, declaring bankruptcy can knock as much as 200 points off your credit score.

Frequently apply for a credit card, loan, or mortgage: If you have an established credit rating, your FICO credit score will drop anywhere between 15 and 20 points each time that you apply for a new credit card, loan, or mortgage. That being said, limit your amount of credit cards to a number that you actually need. It may be tempting not to resist an offer for a credit card from your favorite store at the mall — from Banana Republic to Neiman Marcus — but try to avoid doing so. In the long run, saving 15% on a transaction with your Gap card will never cover the costs that you will incur as a result of a lower credit score. My best advice: Try to consistently zone out cashier(s) when they begin to chime in with additional offers before you make a purchase. As someone who used to frequently sign up for credit cards at Major League Baseball games solely to receive a free towel or T-shirt, trust me on this.

Max out credit cards: If you max out a credit card, it could cost you anywhere from 20 to 120 points on your credit score. To prevent ever maxing out a card, never carry a balance of more than 25% of the credit card’s total limit.

Miss monthly payments: If you miss a monthly payment, even only one time, you can lose up to 35 points on your credit score. I say this frequently in my posts, but regularly paying back bills on time is one of the best ways to improve a credit score.

For more factors that lower credit scores, click here.