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So you've finally made it legal. Once the harsh realities of married life set in, it's probably time to start thinking about your future – like a home. You must have established credit to apply for mortgage loans. Here are four tips to help you get started establishing credit as a couple.
Secure new credit with collateral. If you own your car outright, you can ask a lender to back your loan with it as collateral. If you don't pay back the loan, the lender can use the value of the vehicle to collect the debt. Be sure you have the money in savings to repay the debt, just in case disaster strikes. This method is a great way to establish credit.
Get a secured credit card. A secured credit card provides you with an open line of credit after you make a cash deposit. The lender uses the deposit to cover their loss in case you don't make your payments. You want to pay off any purchases monthly, however, because these cards tend to have high interest. If you make your payments on time, you will eventually establish credit and qualify for an unsecured credit card. Cancel the secured card immediately. When you do so, the secured credit card issuer will return your deposit, less any unpaid balance due.
Make large down payments. If you have not established credit as a couple, you can still qualify for financing for major purchases if you make a large down payment. Lenders are more willing to finance a smaller outstanding balance. A big down payment also makes your monthly payments lower. Shoot for 20 to 50 percent of the purchase price.
Get help from someone with a good credit rating. Enlist help from your parents to co-sign a loan, especially if you need a new car. You can also ask that they co-sign on a credit card, but make sure you are a joint cardholder and not just an authorized user. If you are just listed on their account as an authorized user, then you are not legally liable for the debts. It won't help you establish credit.
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