Fiance’s Bankruptcy

April 26, 2012 by  Filed under: Credit 

Justin Harelik wrote an article for called Make Sure Finace’s Bankruptcy won’t Affect You. In this article, a person, Linda, had written in asking about her fiancé’s bad credit affecting her once they were married. Justin goes on to say that she would not be affected by his credit and suggest opening a joint credit card to help her fiancé get his credit back on track.

As a credit expert, I would have to disagree with this suggestion. In fact, I rarely suggest anyone open a joint credit card account or any other account jointly that will be reported on the credit. The question is why ever open a joint account. The only reason I could possibly I could think of is to be able to qualify for loan such as a mortgage where the income was not enough for only one person on the loan, which is known as debt-to-income ratio.

If the fiancé didn’t qualify for a regular unsecure credit card on his own, he should apply for a secure credit card. Yes, there are credit cards such as Public Saving Bank and Priority One that will approve someone for a secure credit card with a bankruptcy on his/her credit. If Linda really wants to help her fiancé, she should add him as an authorized user to her credit card(s), which most will report on the other person’s credit report. In turn, this will help his credit as long as her accounts are in good standing and maintains a relatively low balance percentage compared to the credit limit.

I always recommend couples adding one another as authorized users. If the account goes astray for some reason, it is usually fairly simple to have the credit bureaus remove the account from the authorized user’s credit report. With a joint account, both parties are responsible for the debt, because both have signed an agreement with the credit card company unlike an authorized user is obligated to have to do in all the cases that I have known of.

In conclusion, never co-sign or sign for a joint account unless it is absolutely necessary to do. If you co-sign or sign for a joint account, be sure to have funds available to pay the monthly balance due in case the other person can’t. This way, you will be protecting your credit from late payments and possibility a collection or charge-off on your credit report.

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