How to Build a Spouse’s Credit History

If your spouse has a poor credit score, it is unlikely to affect your own credit score in any way.

However, it can certainly make it difficult for you to qualify for a joint credit card, loan, or mortgage.

Moreover, your spouse’s credit problems can also lead to potential conflicts and friction at home if the debt starts getting out of hand.

It may be in your own best interest to help your spouse improve their credit score. Here are five ways you can help them do it.

Create a plan for your spouse to pay off debt

Talk to your spouse and come up with a plan to pay off their debts as fast as possible.

Depending on your spouse’s preference and monthly income, they can choose to pay off the high-interest debt first (avalanche method) and move on to the smaller ones or pay off the smallest debt first and move on to bigger ones.

Make sure your spouse pays time

If your spouse has a habit of paying late or missing payments altogether, you need to talk to your spouse and fix the problem as fast as possible.

On-time payments are extremely important to maintain a good credit score.

The best way to do it is to automate the process (so that the money is automatically debited from your spouse’s account every month) or set up account alerts so that your spouse can be reminded to pay their bills on time.

Get your spouse to keep spending in check

Talk to your spouse about the importance of credit utilization ratio and its impact on credit score.

Create a spending plan to help your spouse reduce or eliminate unnecessary expenses. Ideally, the outstanding balance on your spouse’s credit accounts should not be more than 30% of their total credit limit.

Add your spouse as an authorized user on your credit card

Contact your credit card company and ask them to add your spouse as an authorized user on your credit card.

It can boost your spouse’s credit score to a significant extent, as most scoring models take authorized user accounts into consideration while calculating a person’s credit score.

As long as your spouse uses the credit card responsibly and pays the outstanding balance in a timely manner, you can both benefit from the arrangement.

Get a secured credit card for your spouse

If your spouse is unable to qualify for a regular credit card due to their poor credit score, it might be a good idea for you to get them a secured credit card.

A secured credit card is one which is backed by a security deposit. In order to obtain one, a person needs to make a cash deposit with the credit card issuer. The amount of money deposited is the credit limit for the card in question.

You can get a secured credit card for your spouse, load it with your own money, and allow them to use it so that they can rebuild their credit history and boost their credit score.

It should be noted that even with a secured credit card, the credit utilization ratio should not exceed 30%.