Couples and credit scores: How your partner’s credit can affect yours

But, if the relationship is (becoming) serious, and you’re thinking about getting engaged, moving in together or combining financial responsibilities in any way, you’ll want to have open and frank conversations about personal finances with your partner early on. Heck, even if you’re past these stages, it’s always good to check in and have these conversations.

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How to talk about finances with a partner

Money is often one of the biggest sources of conflict for couples. That’s why being open and honest with your partner is so important—including talking about credit scores. Knowing your partner’s credit score gives you some insight into their financial behaviours. Have their bills gone unpaid? Are their credit cards close to their limits? Does your partner have any personal loans? 

Understanding your partner’s financial debt and how to rebuild credit can help create a solid financial foundation for your future together. Here are some considerations to keep in mind when it comes to couples and credit. 

Can my partner’s credit score impact me? And vice versa?

Your financial decisions impact your credit score, as well as that of your partner. Your credit score indicates creditworthiness for lenders, meaning it influences the loans you may qualify for, the interest rate you’ll pay, what you can buy on credit, and maybe even where you work and where you live.

If one partner has had credit red flags, the good news is that won’t affect the other partner’s credit report or credit score. Credit scores are linked to personal information, including your Social Insurance Number, so your credit history remains separate from that of your partner, even after getting married. 

When can your partner’s credit score impact you?

That said, there are scenarios where your partner’s credit score can impact you. Here are four:

1. Rental home: If you are applying to rent an apartment or house together, a landlord can ask to review your credit scores. If one or both of you have a poor credit score rating, the landlord may reject your application.
2. Mortgage: Couples typically count on their combined income and assets to afford a home and be approved for a mortgage. If one of you has a poor credit rating, the other may need to apply as the sole applicant. That can affect the size of the mortgage and which home you can afford. This could also mean a more difficult road to approval and much less favourable terms for your mortgage.
3. Joint credit cards: Credit card issuers consider the lowest credit score when looking at a joint card application. That can result in paying a higher interest rate and low credit limits.
4. Joint loans: Most lenders will add your credit scores together when evaluating your joint loan application, so you’ll need to meet their minimum score to even be considered. If your partner’s credit is poor, you likely won’t meet the minimum and be declined.

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What should we do if one (or both) of us has poor credit?

If your partner’s credit score isn’t where either of you would like it to be, you can work on it together. Here are five steps you both can take to get to a point of healthy credit and prevent debt.

1. Communication is key. Before you take on joint financial obligations, you will both need to be honest about your current situation. 
2. Maintain separate credit lives until your partner gets their finances in a better place (but keep in mind that some people never will). 
3. Establish separate accounts for shared expenses to build trust and ensure both partners contribute.
4. Focus on ways to increase your credit scores over time, such as reviewing your credit report once a year and paying your bills on time.
5. Create a joint budget and use it to help prioritize debt payments. However, if you are using separate budgets, set a monthly date to review your finances and money goals together.

Make sure to hold each other accountable. It’s not money itself that ruins relationships, but the lack of communication and transparency on mutual expectations around money that does. Financial incompatibility is one of the leading causes of divorce, so get to know each other’s scores before making any major financial decisions together. 

Should I get a joint credit card with my partner?

While your partner’s credit score won’t directly impact your credit score, joint accounts or adding the other as a co-applicant will. The one exception is adding your partner as an authorized user to your credit cards and banking accounts. 

When added as an authorized user, your partner is able to use the credit card but cannot make any changes to the account. Their credit will also not be impacted in any way. However, when a partner is added as a co-applicant, they have to go through the required credit checks and both partners’ credit is impacted based on usage of the account.

Joint accounts can be beneficial when both partners are on the same page with money. For example, a joint account can give you access to a larger borrowing limit. It also can simplify your finances and foster feelings of partnership. However, depending on your partner’s money habits, sharing a joint credit card could be a real risk to your money and your credit score.

If either of you miss a payment on a joint account or run up a large balance, each of your credit scores can take a hit. On the other hand, if you and your partner always make your payments on time, both of you will see improvement in your credit scores as the joint account will show up on both of your credit reports. 

Getting extra credit through a joint credit card might seem like a good idea, be sure to assess each of your financial situations before doing so as gaining new credit can influence financial behaviours. Be critical about how having more or less credit affects your ability to live within your means and pay off your debt in full each month. If you or your partner have any debt, the focus should be on paying it down. Only consider a new, joint credit card if you have paid off your individual debts first.

How to maintain healthy credit history (and prevent debt) as a couple

Before combining finances in any way, such as joint credit cards or loans, it is imperative that you and your partner are in agreement and have the same expectations. To maintain healthy credit and prevent debt, consider the following five things: 

1. Make sure your partner is someone you can trust to properly budget by having open and transparent conversations about money. 
2. Set boundaries on how the joint account or loan will be used, as well as spending limits. Some couples ensure they both agree on a purchase beforehand, whereas others may check in at the end of the month to ensure all spends are accounted for—it’s good for catching credit card fraud, too, since you never assume it was the other person.
3. Agree on who will make payments to ensure they’re made on time.
4. Decide the amount you each will contribute to shared expenses. Will it be 50/50 or a percentage based on your incomes?
5. Discuss what happens if one of you can’t make a payment due to income loss or illness. What’s your backup plan?

Money isn’t worth fighting about—but it’s worth talking about

Discussions about finances aren’t always easy. They might cause stress, tension and arguments with your partner. But, the more you practice communicating with honesty and intention, it does become easier. 

None of this is to say your partner having a sub-par credit score should be a deal breaker. In fact, it’s fairly simple to start rebuilding credit. As professionally certified credit counsellors with Credit Canada, we often help couples understand their credit and address debt. If you need additional support, contact us today to book a free credit-building counselling session.

Read more about building credit in Canada:

• The best credit cards for newcomers to Canada
• The best student credit cards in Canada
• The best credit cards for instant approval in Canada
• The best credit cards for bad credit in Canada

About Sandy Daykin

Sandy is a certified credit counsellor with Credit Canada, the country’s longest-standing non-profit credit counselling agency.

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