Does marriage affect your CIBIL rating?

24-Aug-2016 written by : FSI-Team

Life doesn't remain the same after marriage. It brings about significant changes in the lives of both the partners. The decision to take vows not only brings lifestyle changes but it affects one's financial life as well. You start thinking about savings, investments, and insurances more seriously than ever. You think about taking joint financial decisions. But does marriage affect your credit history records as well? Does it affect your CIBIL rating? What are the implications if one partner has a good CIBIL rating and the other does not? Let's explore.

Joint credit scores do not exist

Tying a knot will not merge your CIBIL rating. Both the partners will be considered independent entities having separate accounts and credit cards. Each partner's CIBIL rating will be dependent on his/her financial discipline and credit repayment patterns. It will be in no case influenced by the partner's credit score. Even if the wife changes her surname post marriage her credit report remains the same. The past history with the maiden name does not get erased. It gets carried forward under the changed name.

If your partner has a low CIBIL rating, it will not affect you in any way unless you both take a joint loan, in which case you may have to bear a high rate of interest. Similarly, if you have a bad credit score, you will not benefit by simply getting married to a person with an excellent CIBIL rating.

Independent loan accounts

If you independently apply for a loan then only your CIBIL rating will be evaluated for loan eligibility. Your spouse's credit score will not have any positive or negative affect on the loan application approval. If you default on loan payments then only your credit score will get adversely affected and not that of your spouse.

Joint loan accounts

If you decide to take a joint loan with your spouse, you will be financially associated with each other. Both your credit histories will be assessed before the loan is sanctioned. If both the CIBIL ratings are good, you stand an excellent chance of approval of a big amount. You may even get the loan at a lower interest rate. Both of you can get tax advantage and can jointly share the responsibility of repaying the loan. But if one of you has a bad credit, it will reduce your chances of loan approval. Even if the loan does get sanctioned, the interest rates will be very high. The repayment patterns of the joint loan will affect the credit reports of both the partners even if repayments are done from the primary applicant’s account. Hence any defaults on payments will bring a red marks on both your credit records.

Indirect effects

Though marriage doesn't affect your CIBIL rating directly, there are some indirect impacts which you must be aware of. If your partner is not financially disciplined and indulges in over expenditure it may stretch your finances as well. This may lead you to default on payments thereby dipping your credit score. If you are not earning and your partner is responsible for making payments of your credit cards, then his irresponsible behaviour in paying dues on time may negatively impact your CIBIL rating.

A word for women..

Though you may want to leave your past behind while entering into the new institution of marriage, it is advisable not to close your old credit cards or accounts. If you have serviced your obligations responsibly in the past then this clean credit history will help in ensuring a good credit score. It may come handy in case you need a loan in future to deal with emergency expenditures. Your lenders will have substantial information to make a judgement about your credit behaviour. Closing old accounts will erase the records of your debt servicing patterns.

A word for men…

If you give an add-on credit card to your spouse, remember that you as the principal card holder are responsible for making timely payments. The payment patterns and the credit utilization ratio of the add-on card will affect your credit score and report directly. Hence it is advisable to discuss with your spouse about how to use the credit card wisely.

Marriage is an important milestone in one's life. It is important to know the financial repercussions of your union so that you can plan your financial future together.



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