You’ve probably heard the statistic that 50% of marriages in the US end in divorce. To be fair, that often bandied about number isn’t exactly accurate: According to the National Center for Family & Marriage Research, only 16.1 out of every 1,000 marriages ended in divorce in 2017. That still accounts for just over one million women who divorced in 2017. No matter how you swing it though, quite a few marriages end in divorce.
There’s certainly nothing wrong with trusting in the strength of your relationship. In fact, many would argue that trust is the very key to long term relationship success. Yet, healthy relationship or not, you need to establish credit in your own name. Not only that, you should keep your credit separate from your spouse’s credit as much as possible. Repeat after me: It’s important to remain credit independent.
It wasn’t so long ago that women struggled with this issue in a big way. Until 1974, “women encountered significant barriers to obtaining credit, even when they were the primary wage earners in their families,” according to From Suffrage to the Senate.
Luckily, things are different now, and this is a key issue that women need to pay attention to.
Why You Should Avoid Joint Accounts
There are two major reasons why avoiding joint accounts is so important (for your own sake and to protect your spouse).
Joint accounts are messy in a separation.
Whatever the odds actually are, divorce can happen. Think about how many people you know personally who have been through a divorce. Unfortunately, divorce and credit problems often go hand in hand. One of the primary reasons why this happens is due to joint accounts.
You can divorce a spouse who has done you wrong, but you can’t divorce the joint debts you opened together. If your name is on a joint account, the lender isn’t going to let you off the hook even if your divorce decree says your ex has to pay the bill. Positive or negative, that joint account will remain on your credit reports regardless of what the divorce decree says.
The only way to separate yourself from a joint account is typically to refinance the debt into one person’s name or pay it off. If the debt is attached to an asset, like a house, you might be able to sell the asset and pay off the loan. However, if you and your ex can’t find (and agree upon) some way to pay off the joint account, it could remain on your credit reports and potentially cause you problems for a long time.
Avoiding joint accounts can protect your family.
There’s nothing wrong with feeling solid about your relationship. Still, even if the possibility of divorce is the last thing on your mind, it’s wise to keep your credit accounts separate for strategic financial reasons.
Sometimes financial disasters strike and there’s nothing you can do to stop them. People get sick or lose their jobs and fall behind on bills unexpectedly. If you experience a financial hardship and you become past due on a joint credit obligation, you’ve just damaged the credit reports and likely scores belonging to two people instead of one.
Yet if you keep your credit obligations separate, you might be able to protect one set of credit reports – either your spouse’s or yours – if disaster arises. If you succeed, your family might be able to retain access to some form of good credit in at least one person’s name until you recover financially and have the opportunity to rebuild.
There are exceptions to the rule.
Sometimes you may need to co-sign with your partner for large purchases, notably mortgages. If you can’t qualify for a loan large enough to purchase the home you want based upon just one income, a joint mortgage loan may be something you need to consider. This is an understandable exception to the credit independence rule.
Everyone Needs Good Credit
Whether you’re married, single, or in a long-term relationship, your credit matters. Credit can impact your ability to take out a loan, open a credit card, and secure reliable transportation. Good credit also has the potential to save you real money every month through lower interest rates, cheaper insurance premiums, and in other ways you might not realize.
You can’t afford to ignore your credit and depend upon your partner to take care of things for you. So yes, while the title of this article talks about how it’s important for women to remain credit independent in reality, it’s good advice for anyone to follow.
Michelle Lambright Black is the founder of CreditWriter.com and HerCreditMatters.com. She is a leading credit expert with over a decade and a half of experience and an expert on credit reporting, credit scoring, identity theft, budgeting, and debt eradication. Michelle is also an experienced personal finance and travel writer. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).
Feature Illustration: Laura Caseley For The Money Manual