Question about marriage and how it affects credit ratings and taxes?

Hi. Thanks for taking some time to read my question... Im planning on getting married soon, and also on purchasing my first home. I have excellent credit, my fiancee has little credit and has paid off some bad debt. Im wondering how this will affect our rates when we go to get a home loan...also, Im wondering if we will save on taxes if we marry?? She doesnt make much ( > $10K) and goes to university. I made $60K last year. Married, we'd be at around $70K. Would it make sense to get married now to save on taxes? If we marry, does my credit score go down when her's is added to mine?? How does this stuff work?? Basically, I dont want to get married and have our ratings so low that we cant get a decent loan rate...

Public Comments

1. Your fiancee's credit record actually doesn't directly impact yours, even when married. Any actions you take together, such as loans or credit cards with both your names, will. So, if she has a credit card with a bad history, for example, keep it in her name only; don't have her add you, or you'll get the impact of the bad rep associated with her card. If you both apply for the loan, her information will be taken into account too and can impact the decision.
2. first i think you are super smart to be worried about money problems before marrying instead of making it grounds for a divorce -- that said -- yes your score will go down and the lillte bit you two save on taxes will be off set by high interest rate you will pay on a home loan -- i would stay single -- procure the house in my name only and tell her to get her credit score improved!!!
3. I don't really know about the taxes, I mean I know that you probably get a bigger refund if you file together, but I don't know the details of it. My husband and I still file seperately. However, on the credit situation, it's not like your credit gets added together. Her bad credit won't effect your credit when you get married. The only time her credit could affect yours, is if you were to co-sign for her and she didn't make her payments on time. Then, that would affect your credit in a negative way. When it comes to the rate on a mortgage, of course if you have excellent credit, you're going to get a lower rate. If they use both of your credit, with hers not being that great, the rate won't be as low. You can get a mortgage in your name only, so that way you could get the best rate. You could later have her added to title, so that way you would both be on title to the house, but your mortgage terms wouldn't be affected by her bad credit in any way. But, if you do that, the mortgage wouldn't be reporting on her credit. It would be on yours only. Hope I helped at least a little. If you have any other questions that I can help you with, just ask.
4. Let me save you $10's of thousands of dollars and a lot of headaches. Hold on to your wallet. Been here, done this. This is what I learned. 1. Your smart for planning ahead here. 2. I am not to sure about the marriage thing, since I don't know your situation, but best of luck there. You need to do the following, and some people, esp single people of the opposite sex may not like it, but part of what I do is to manage risk. This has nothing to to with love, or marriage it is about asset protection and controlling risk. 3. Buy the first home BEFORE you get married. In most "no fault" states assets and liabilities owned before marriage stay with the person if it doesn't work out. Just your name is on the title, and you pay 100% of all the expenses for the house. She can potentially claim 50% of any equity after you are married, but the asset will likely be yours. 4. Keep moneys in separate named accounts and separate names. Have ONE account if you want to pay joint bills and expenses. 5. Getting married to save money on taxes is a BAD IDEA. There is still the marriage penalty tax. The Demo's under former Clinton penalizes people who are married. Bush has been unable to change this because the House and Senate is controlled by the Demo's. They want the tax money. 6. Your credit scores stay the same. Best do this. Have separate accounts and give her a credit card in her name only not to exceed a credit limit of $2,500.00. That's 25% of her annual income, and if she maxes that out that means it's all you who has to pay. Her debt to equity should be lower. I would prefer to suggest as a better idea to have another joint account for "whatever" expenses - food, day to day stuff. You can't max out a debit card when there is no overdraft. 7. Statistically, money issues are the #3 leading cause for divorce. When there is a huge money/income imbalance between the two, the one who has money gets penalized. 8. Finally, PRENUP, PRENUP, PRENUP. I know people will balk at this but it is very common these days because the divorces statistics are over 50% within 5 years of marriage. Seek a family law or other attorney to assist with this. Keep in mind that some people will cite emotions and we're in love and blah balh balh as why this all shouldn't be done. The statistics tell a much more compelling reality. Hope for the best, (also get premarital counseling, discuss kids issues, how raised, etc). If everything goes well, none of this comes into play. If it doesn't work, at least you won't be taken to the cleaners for the next 18 years as soon as you have kids if that is likely. I have worked with many family lawyers, CPAs and other legal experts on these issues. TRUST ME. You will thank me later. Good Luck! PS Read my bio, then read other's bio. Do they have the qualifications and actual experience to give you sound advice on your question. In who's interest do they really represent?
5. Your credit scores are separate and distinct. One score will not affect the other. Period. The only way for your future wife to affect your credit is to default on a joint account. Yes, if you choose to file your taxes as a married couple you will save a significant amount of money (especially since she doesn't make much). There is no longer any marriage penalty. The standard deduction for a married couple is exactly double the standard deduction for a single person (the previous 'marriage penalty' was the fact that the standard deduction for a married couple was less than 2x a single person's deduction - ostensibly because it doesn't cost 2x to maintain one household for two people). The tax rates for married people filing together are quite a bit lower than for single people. Since your taxable income will only increase by 10k, your net tax rate will decrease quite a bit (look it up in the tax table this year). For a home loan it would make sense to do one of two things. Get the loan in your name only right now. Or wait until she has graduated and is making much more money. Check both of your credit right now, before you are married. You don't want to find out later that she owes $100,000 you didn't know about! Good luck with it all!
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