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mismanaging credit

Mismanaging Your Credit

Are you mismanaging your credit with your significant other or anyone else?

Have you let the heartstrings get pulled again? Have you cosigned for somebody or something whom you know is financially irresponsible?

If you know that person couldn’t get a bank loan, a traditional loan, or a credit card on their own… but then you went and signed on the dotted line for a personal loan, a credit card, an auto loan.

Perhaps you were letting the heart lead instead of the head.

But other times, in terms of mismanaging our credit, we might be unwittingly doing other things. For example, if you’re married, ladies, do you have credit established in your own name?

It’s really important that you do that because credit reports don’t just merge–even if you get married. You can merge accounts, you can have co-signers, you can have a joint account, or you can have one of you listed as an authorized user, but the face of the matter, each of you as adults are independent individuals that have your own credit reports with each of the three credit bureaus, including:

  • Equifax
  • Experian
  • TransUnion

When you marry someone, your credit reports don’t automatically merge. But if you cosign together, or if you cosign for someone else, you’re individually- and jointly-responsible for that debt. It’s a joint liability.

This means that if you break up down the road and you cosigned together on a mortgage, for instance, you can have a “divorce decree” (an agreement that says that my ex is financially responsible for the debt). If he or she fails to pay as agreed per the divorce agreement, that has nothing to do with your legal and fiscal responsibility to the creditor. The creditor still has the right to pursue you, potentially to collect a judgment against either one of you and/or both of you if that bill doesn’t get paid.

So, it’s important to manage your credit wisely and think twice about cosigning. And it’s important in how you maintain and establish credit, as well as financial independence and autonomy–and of course, unity once you’re married.

My Advice? Maintain Your Autonomy

I advise people to avoid joint accounts prematurely (ie. before you tie the knot). At the same time, it’s a smart decision even after you’re married to have joint and separate accounts. That goes for banking and checking accounts, as well as credit accounts. I think all people–and women, especially–all of us should have credit maintained in our own names.

I can’t begin to tell you how many times I’ve heard about women who’ve divorced and then all of the credit was listed in their spouse’s name, leaving her high-and-dry. This can make her vulnerable to having no credit or a “thin” credit file.

How We Abdicate Financial Responsibility

Lastly, another common financial mistake that a lot of women make (I’ve been guilty of this, too) is to abdicate financial responsibility. Typically, it is on behalf of a male. Some women feel that “money stuff” is too complicated, boring, or it’s too time-consuming. In that case, you may abdicate financial responsibility to your partner, your husband or spouse, like: 

  • “I’ll let him tell me where to invest my money.” 
  • “I’ll let him tell me where I should put my 401(k).” 
  • “I’ll let him pick which type of real estate when I make my first home purchase.” 
  • “I’ll let him pick where I should put my savings.”

When you make these decisions, you abdicate responsibility to “daddy”, “hubby”, to… “sugar daddy” (just joking, sort of…). It’s not a good idea when you turn over financial control and autonomy in your life to another person (anybody else, for that matter). You really need to be plugged in and “in the know” about what’s happening with your finances at any given point and time.

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