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Ask Dr. Don
By
Don
Taylor,
Ph.D.,
CFA
•
Bankrate.com |
His credit -- Our house
Dear Dr. Don,
I'm currently dating someone who has very bad credit
due to a divorce. My credit is fairly good and improving. We are planning
to move to Washington state, which is a community property state.
The question is: Will his past credit history negatively affect my
credit rating if I apply for any form of credit? We do plan on buying
a house one day and thought it would be best if I applied on my own
instead of jointly.
Reyna Rigging
Dear Reyna,
Keeping your credit separate, even in a community property state,
is a fairly simple matter unless you marry. Don't co-sign any loans
for him, don't open any joint accounts and don't let him be an authorized
user on your credit accounts. Likewise, don't become an authorized
user on his accounts.
If you marry and then buy a house in a community property
state, then the mortgage will be considered a joint obligation and
you can't avoid using your husband's income and credit history on
the loan application. You should list yourself first on the loan
application so that your credit history is the first one the lender
reviews.
Buying a house before marrying would allow you to
apply solely in your name, but you wouldn't be able to use his income
to help you qualify for the mortgage. This Bankrate calculator
can help you determine how much house you can afford on your own.
Nine states -- Arizona, California, Idaho, Louisiana,
Nevada, New Mexico, Texas, Washington and Wisconsin -- are community
property states. In those states community property includes real
estate, tangible assets, and the earnings of both spouses acquired
during the marriage. Assets acquired by gift or inheritance or assets
owned before the marriage are not community property.
He can rebuild his credit history with time. Most negative information
drops off a credit report after seven years. A Chapter 7 bankruptcy
filing stays on a credit report for 10 years. Even with negative
information on his credit report, a strong track record of staying
current on his bills will help raise his credit score. Bankrate
has partnered with myFICO.com to provide this free credit
score estimator.
-- Posted: Feb. 9, 2004
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