Do you know that your credit score can also be affected after marriage? This may sound strange, but it is true. If you want to maintain your credit score even after marriage, it is very important to understand this topic. Credit score ranges between 300 to 900, and having a higher one is beneficial for you. Let us know in detail what effect marriage can have on your credit score.
Trend of joint account after marriage
After marriage, people often open a joint bank account or apply for a joint home loan.
- Meaning of joint loan: The responsibility of the loan rests on both husband and wife.
- Bank Terms:
- The bank checks the credit scores of both in joint home loan.
- If one’s credit score is low, the bank can increase the interest rate of the loan.
- Besides, the chances of loan approval also reduces.
According to Satish Mehta, founder of ACX, in case of joint loan, the credit score of both the partners plays an important role.
Benefits of good credit score
If both husband and wife have good credit scores, there are many benefits:
- Loan Approval: The chances of getting the loan approved increases.
- Interest rate concessions: The bank offers concessional interest rates on better credit scores.
According to digital lending consultant Parijat Garg:
- The bank gives importance to the credit score on the basis of contribution in loan repayment.
- Example:
- If the wife’s contribution towards the loan is 60%, the bank will give more priority to her credit score.
- If the contribution is only 25%, their credit score will matter less.
Impact on credit utilization ratio
Joint account and joint loan also affect the credit utilization ratio.
- Credit Utilization Ratio: Your utilization against your total credit limit.
- Low Ratios: Responsible Financial Behavior.
- High ratios: indication of financial position under pressure.
Dev Ashish, Founder of StableInvestors explains:
“Low credit utilization ratio reflects financial discipline. Whereas a higher ratio may be a matter of concern.”
Ways to improve low credit score
If one partner’s credit score is low after marriage, it is important to take steps to improve it:
- Know the reason for the low score: Analyze defaults or missed payments.
- Pay on time: Pay credit card and loan installments on time.
- Share the responsibility of joint loan: Ensure repayment of the loan from both sides.
According to experts, improving the credit scores of both partners:
- Loan approval will be easy.
- There will be concession in interest rate.
- Financial plans will go smoothly.
