25-Apr-2018 written by : FSI-Team
Congratulations. So you are about to get married and are in middle of planning the details to the minutest of the requirement. Looking forward to the new chapter in your life, you have all the dreams of exciting times ahead. But the financial savvy person inside you is also skeptical as to how your financial life will shape up with this new beginning. And you are also worried about your credit profile, since it makes an important part of your financial life.
So the good news is that you need not worry since the marriage is not going to have any impact on your credit score. Reiterating, no impact, what so ever.
But there are a few elements that you definitely need to factor before you actually concede to take the above advice literally. While the marriage will not impact, following elements need to be kept under check:
In the event your spouse has had a rough time financially and has not been able to pay up the loan obligations the same may come haunting in future. Both of you while have a separate credit history and credit worthiness, impaired credit profile of one of you is only going to reduce the eligibility to access funds despite having repayment capability.
To explain it better, say both of you earn Rs 50,000 each every month. This leads to combined income of Rs 100,000. As per standard calculation an EMI of up to Rs 50,000 can be granted. However, in the light of only one person having access to loans, the same will drop to Rs 25,000. So your capability to raise more funds will drop.
Not only this, you may be required to plan out repayment of the issue based accounts from your own funds.
Generally, couples apply for joint loans post marriage. Especially when a large ticket loan, like a home loan, is being sought from the lending institution. Goes without saying that the impairment on one of the spouses' bureau report will seriously damage the chances of applying for a joint loan.
Again, it will lead to the situation where all the pressure of availing credit facilities will fall on your shoulder and this may lead to some stress on the credit profile. Over all exposure to credit also impacts the credit score and since you would be inching closer to the maximum limit, the score may get impacted, though temporarily, till you continue to pay it well over a period of time.
This is something that generally the people planning wedding do not realize. The ease of access to limit on credit cards where you can pay as low as only 5% of the total amount due leads to maxing out. Please be aware that the not only the closer you move towards the prescribed limit on your cards, the poorer it reflects on your ability to manage expenses and thus leads to lowering the scores; more importantly, over spend on the credit cards during this time can lead to debt trap and defaults. So whatever you spend please be judicious and plan only what can be paid off completely.
Also be aware that the change in last name is not going to write off past history and start a new one. The name with new last name instead is going to get updated on the credit bureaus. Your past performance, good or bad is going to stay with you and will continue to impact your personal loan eligibility.
So while there will not be a direct impact of marriage on your credit score, there can be fall outs on account of your spouse's past performance on loans and your own ability to manage credit at this new turn in life can have far reaching implications on your credit profile.