While it is true that you will be sharing a name, a house, a bed, a kitchen, and probably the popcorn as you watch Friday night movies, it is not true that you and your spouse will be sharing a credit report. Neither is it true that marriage makes taxes higher. In fact, quite a few credit myths could affect how you handle your finances, especially when you get married. Here, we outline a few.
MYTH #1: Marriage makes you pay more taxes. While not everyone gets to pay less tax when they get married, not everyone has to pay more tax either. To make the picture more concrete, let’s take a look at the cold, hard facts from the Business Insider:
-Couples with disparate income enjoyed an average tax break of $1,300
-51% of married couples paid less in taxes jointly than they would have if they were single
-42% of married couples paid more taxes jointly
Thus, when it comes to taxes and marriage, your mileage may vary. Just hope that you’ll belong to the 51% of couples who paid LESS tax when they got married.
MYTH #2: Once you get married, you and your spouse will share a credit report. This belongs among the credit myths to be avoided, at all costs. At no point in your life will you ever get to share a credit report with another person, not even your spouse. A credit report and credit history corresponds to one Social Security Number, so for the whole of your lifespan, your credit report will be yours and yours alone.
MYTH #3: Once you and your spouse get joint credit accounts, you will share one credit report for your joint activities. Related to the previous point, this is another one of those credit check myths.. Even as you and your spouse will have joint credit transactions, your transactions will go to your respective credit reports, affecting your overall credit standing. So even when the accounts are joint, regardless of whose transactions they were, work on repaying your transactions properly, in order to avoid negative entries on your credit report.
MYTH #4: It’s a bad idea to terminate joint accounts for any reason. Among the credit myths is the thought that if the couple move to terminate joint accounts, their individual credit reports may suffer. On the contrary, terminating joint accounts in the event of a divorce or in the event that one of the spouses is in financial trouble is a good idea. This move will ensure that the other spouse’s credit will not be affected if the credit report for the spouse in trouble suffers. In the case of divorce, terminating joint accounts will ensure that your ex will not be able to harm your own credit with their shopping sprees and other transactions made on your joint accounts.
MYTH #5: Getting married automatically turns our individual accounts into joint accounts. While credit myths that echo this thought sound very absurd, many a couple has fallen for it. The truth is, if you and your spouse want to open joint accounts, you both will have to vigilantly research your best options, weigh them, and decide accordingly. Should you want to close some of your own individual accounts, you should weigh the pros and cons as well. Just as in your credit score and credit report, accounts stay separate unless you apply for those as a couple.
MYTH #6: Bankruptcy filing has to be done as a couple. If one of you needs to file bankruptcy for any reason at all, he or she can actually go ahead and do it. If only one of the couple is in dire financial straits and filing for bankruptcy is a necessity, they can definitely file for it without the other spouse.
MYTH #7: The couple’s joint income can boost both of their credit scores. In all truth, income is not even a factor in a credit score. Again, this is another one of those credit myths to be avoided.
The effects of credit myths include misinformation that may keep you from making crucial decisions. In fact, some of these effects are pretty costly: instead of being able to file for and enjoy possible discounts and tax breaks, believing in credit myths may stop you from reaching out for and taking advantage of discounts, refunds, and other financial perks that may be available to married people. So stop believing in credit myths that affect how you handle your finances. Embrace the freedom that knowledge can afford you!
About The Author
Amy Johnson is an active blogger who is fond of sharing interesting finance related articles to encourage people to manage and protect their finances.
1 Comment
A lot of great point here. On thing I also want to point out about doing things jointly that I discovered was that our house wasn’t deeded to both of our names and once we did some basic estate planning our lawyer pointed this out to us. Heck I just thought that was all done automatically, because without both names on the deed you will have to go through probate if one spouse passes away.