What’s Mine Is Yours: Marrying Into Debt

Does saying “I do” to someone mean saying “I do” to their debt? 

If you’re spending a considerable time wondering about the “for richer or for poorer” part of wedding vows, you may also be wondering:

• How does debt work when you get married? 

• What happens to your credit when you get married? 

• Do married couples share credit scores? 

• How can the two of you work together to tackle debts?

It’s normal to have these questions and in this article, we’ll share some strategies to consider. Of course, if you have legal concerns, be sure to consult an attorney.

Honest conversations about debt

First, let’s take a step back — have you talked with your partner about how much debt they carry?

Talking about finances can be uncomfortable, especially if you owe more than you’d like. This may be why 43% of Americans hide significant credit card debt from their partner. 

It may go without saying, but hiding money issues from your significant other isn’t the best way to build trust — honesty is. As part of an open conversation about money, issues to discuss include:

• Incomes

• Bank balances

• Retirement savings

• Spending philosophies

• Saving/investing philosophies

• Credit scores

• Outstanding debt

• Monthly payments

Once all of this information is out in the open, you can create joint goals and a plan to achieve them — whether it’s buying a house, traveling, building wealth, or starting a family.

Marriage debt: How does that work?

Do married couples share debt? In other words: Is it an automatic process that occurs after the ink dries on the wedding certificate? 

Experian, one of the major credit bureaus in the United States, explains that debts incurred before marriage typically stay with the person who took on that debt. This means that, in general, your partner’s existing debt wouldn’t become yours simply because you got married. 

But what about after the ceremony: How do you take on debt when married? The responsibility for post-wedding debt and how it’s shared depends on the state of residence. For example:

• Several states are community property states. In these states, debts taken in a marriage are considered the equal responsibility of both partners — even if one of the partners isn’t aware of the debt. 

• Most states follow common-law rules. This means that each member of a married couple can take on debt individually, have individual bank accounts and so forth. Debts that benefit both members, like food and housing expenses, are considered to be jointly held.

• Then there is Alaska. In this state, a newly wedded couple can decide to opt into the community property setup. Most don’t, so their debts are handled in a common-law way.

Again, if you have specific questions about your situation, it would be wise to consult an attorney.

What happens to your credit score when you get married?

Getting married doesn’t have a direct effect on the individual credit scores of the newlyweds.

There are three national credit bureaus — Equifax, Experian and TransUnion — that calculate and report credit scores. These are individual credit scores because there’s no such thing as a credit score that combines the information for both members of a married couple. 

That said, if at least one member of the couple has a poor score and it’s time to apply for a credit card, that could be problematic. It may be harder to get approved for the card, or it could be granted at a higher interest rate. Then, if one member racks up charges on that jointly held account, both are responsible for the debt. 

Tackling marriage debt together

The most important step may be the initial one: a conversation where you agree that you’re finally ready to tackle marriage debt together. As part of that talk, you can discuss goals and barriers that you need to overcome. For example, if one or both of you are prone to impulse spending, you may want to create a plan to beat that budget killer. 

Some ways to combat that specific challenge could include:

• Allocating more money towards groceries rather than dining out

• Writing down what you spend

• Saving the money you’d intended to spend on an impulse purchase

• Incorporating no-spend days into your routine

Budget

No matter the challenges you need to address, it’s important to create a budget that works for both of you and helps to position you for success. There are numerous types of budgets, and you can pick the one that makes the most sense for your situation. They include:

• Traditional budget: Calculate the combined income you have coming in and the expenses going out. Take this info and create goals for each budget category: housing, food, clothing, etc. 

• 80/20 budget: Automatically put 20% of your income into your savings. Use the rest to pay your expenses; then, any remaining funds are yours to spend as desired.

• 50/30/20 budget: Use 50% of your income to cover needs, 30% for wants, then save 20%. If you go this route, be crystal clear with your partner about what’s really a need and what crosses over into the want category.

Build credit

Some couples may need to rebuild their credit. If that’s your situation, here are strategies to consider:

• Set up automatic payments; late or missed payments can wreak havoc on credit scores and lead to costly fees and more.

• Use only 30%, or less, of your available credit. This is considered your utilization rate. Ways to manage the utilization rate include:

• • Using your credit cards like they are debit cards, only charging what you can afford to pay out of your checking account 

  • Paying off the credit card twice a month to prevent the balance from going up too much

• Don’t close credit cards unless you have a really good reason; keeping more established cards open may help you because a lengthy credit history can be a plus.

These three methods can help you pay down or pay off credit card debt:

• Debt avalanche: Prioritize first paying off debt with the highest interest rates while still making minimum payments on other debt. Once the highest rate debt is paid off, focus on the debt with the next highest interest rate, and so on.

• Debt snowball: With this method, pay off debts with the smallest balances first to get them off your list while making minimum payments on the other debts. Once you’ve paid off the smallest, move on to the next smallest. Rinse and repeat.

• Debt consolidation loan: You could take out a personal loan and pay off credit card balances. This reduces the number of monthly payments you’ll need to make and possibly lowers the interest rate.

If you and your spouse need help in managing your credit card debt, check out Tally. With Tally†, you can strategically pay down your credit card debt by automating the process — allowing you more time to focus on other parts of your life together.

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.