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cassembler
Posts: 470
Registered: ‎02-07-2011

Stay-at-home spouse... Good Credit Benefits?

I'm adding my wife as an AU to two of my cards. Wanted to bounce this off you guys to make sure it makes sense.

 

For some background, her credit was wercked by an ex, the last baddie just before we met about six years ago (i.e. all about to fall off). Since then, she has one Cap1 card (~$0 balance) and that's it. Also, we plan for her to go stay-at-home in ~1 year or so, if we're blessed enough to have kiddos.

 

On the surface, it's a no-brainer: she can see the account activity (trust) and can use the card as needed (trust/convenience). Long-term, it will help her credit... But that's where I'm kind of stuck.

 

What good is good credit for a stay-at-home spouse? Can anyone think of how we can benefit, assuming mine is as good or better?

"Credit is purely a cash flow tool. Thinking of credit as extra money you didn't have before makes it an EXPENSIVE cash flow tool."
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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: Stay-at-home spouse... Good Credit Benefits?

Well, one benefit that most people never think of until too late is that if some financial disaster hits, and one of you is forced into bankruptcy, if the other person has good credit and accounts in his/her own name, that person can carry the credit load while the other goes through the BK years. This would also happen if some less dramatic problem hit one person's report, like a collection. Even if it was a bogus collection, stuck on there by a junk debt buyer trying to pressure you into paying to get it off, your credit would be in the tank until you could get it fixed. Think about the family car rolling over and dying during this time period, and you need to get a loan for a replacement. If you have problems with credit, but she has good credit, she can get the loan in her name, and it would benefit the family.

 

More to the point, it's the right thing to do, IMO. Thumbs up to both of you for trying to make it work for her to be at home for a year if you have a little one. I can promise you from personal experience that it is just as much work to run a household and raise kids as it is to work in an office, and the workday isn't over at 5 pm, either. You two are working as a partnership in a joint business, called your family. You might have different responsibilities for a while, but you equally shoulder responsibilities and equally share the risks of trying to make a go of it in these scary days, and to me, that means that she has a right to credit in her own name.

 

It's kind of a sad commentary on modern life that people are looking on whether someone makes enough money to "deserve" credit. There's different ways of contributing to a family, and value should be put on all these different contributions, not just a paycheck. (I certainly don't mean this as an attack on you; it's just a change in mindset that I've seen over the years that only values cash, and discounts all the other things that make a family successful.)

 

JMO, and all that. :smileywink:

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drkaje
Posts: 3,482
Registered: ‎07-25-2008

Re: Stay-at-home spouse... Good Credit Benefits?

Touchy subject: I still feel a part of credit is based upon ability to re-pay. Having credit in ones own name is typically better and protects against changes in circumstances with the primary cardholder. Anyone who has been through a divorce or break-up when people were tied financially will tell you "Stuff happens".

 

Be a stay at home Jake?! No thank you! I love the kids but would be bored poop-less after about two days. :smileyhappy:

 

If someone wants to stay home and can really afford it (financially and spiritually), more power to them. I just think it's a little unreasonable to expect the same lifestyle two paychecks can afford. I realize that's not a popular opinion but did water it down a great deal.


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cassembler
Posts: 470
Registered: ‎02-07-2011

Re: Stay-at-home spouse... Good Credit Benefits?

Thanks both for the posts, which kind of shows the deliciously subtle conundrum we're in.

 

A agree there's no reason my wife should be stuck with no credit, while we're each 50/50 part of the "business," so to speak. And the cases Hauling brought up are perfectly valid reasons why an effort should be made to grow it. I intend to have her cosign on the next car note, for example.

 

And, worst case scenario, if we did ever decide to part ways, or I kick the bucket, a lot more options are available that might make things less awful in general.

"Credit is purely a cash flow tool. Thinking of credit as extra money you didn't have before makes it an EXPENSIVE cash flow tool."
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FrugalRican
Posts: 2,876
Registered: ‎02-02-2012

Re: Stay-at-home spouse... Good Credit Benefits?

I think she needs to establish her own credit. Is she still working now?

Because a YEAR is a LOT of time to establish her own.

 

I get the AU route, I really do, but I don't see how that really helps the trust issue... but that's my opinion.

 

And you said she'll be a stay at home mom for a year, could be longer... could be less.

Point is, she's going to need credit and establish it responsibly. You are looking too much at the short-term and at just one small gap in time. Look bigger picture, longer-term.

 

God forbid something happens to you and all she has is a Crap1.

You two have time. If piggybacking off of you for a few months gets her better cards, then so be it, but after reading and hearing and seeing so many AU horror stories in the past... I'd be trying to work harder to get her own credit set up, rather than trying to bank off of mine.

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webhopper
Posts: 7,230
Registered: ‎09-16-2011

Re: Stay-at-home spouse... Good Credit Benefits?


FrugalRican wrote:

I think she needs to establish her own credit. Is she still working now?

Because a YEAR is a LOT of time to establish her own.

 

I get the AU route, I really do, but I don't see how that really helps the trust issue... but that's my opinion.

 

And you said she'll be a stay at home mom for a year, could be longer... could be less.

Point is, she's going to need credit and establish it responsibly. You are looking too much at the short-term and at just one small gap in time. Look bigger picture, longer-term.

 

God forbid something happens to you and all she has is a Crap1.

You two have time. If piggybacking off of you for a few months gets her better cards, then so be it, but after reading and hearing and seeing so many AU horror stories in the past... I'd be trying to work harder to get her own credit set up, rather than trying to bank off of mine.


The Stay at Home Spouse and even the spouse with the lessor income needs good credit too in my opinion.. what if you want to refi the house, or go joint on a car loan for 24 months instead of 60 months. What if their income, even though its less than yours, will be needed one day on an application. 

 

We are currently rebuilding my fiance's credit for this reason. 


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cassembler
Posts: 470
Registered: ‎02-07-2011

Re: Stay-at-home spouse... Good Credit Benefits?


FrugalRican wrote:

I think she needs to establish her own credit. Is she still working now?

Because a YEAR is a LOT of time to establish her own.

 

I get the AU route, I really do, but I don't see how that really helps the trust issue... but that's my opinion.

 

And you said she'll be a stay at home mom for a year, could be longer... could be less.

Point is, she's going to need credit and establish it responsibly. You are looking too much at the short-term and at just one small gap in time. Look bigger picture, longer-term.

 

God forbid something happens to you and all she has is a Crap1.

You two have time. If piggybacking off of you for a few months gets her better cards, then so be it, but after reading and hearing and seeing so many AU horror stories in the past... I'd be trying to work harder to get her own credit set up, rather than trying to bank off of mine.


Well, to answer some of your questions, consider she has some old open collections (not small ones either) we're waiting to stop reporting, all about 6 years old (past SOL). So if we get anything for her on her own, I'd prefer to wait until her score recovers (i.e. one rebuilder card is plenty). If all goes to plan, she'll be out of the work force for several years, give or take (and hopefully come out of it with a degree of some kind).

 

In the meantime, my income and credit should service all of our needs, but like you said, should something happen to moi, she'll need it.

 

So long and short, the plan is to keep her scores from tanking a mortgage later this year, and have her co-sign a car note in '13 or '14 (no hurry). By then, she'll have three revolving with perfect marks, a longer AAoA, and an open car note. Then we can get a prime card or two and add her to a re-fi on the house.

 

Again, plans change, but that's the plan.

(PS the trust part of AU comes from having her own card really. I thought she would be able to see account activity as well, but apparently not.)

"Credit is purely a cash flow tool. Thinking of credit as extra money you didn't have before makes it an EXPENSIVE cash flow tool."

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