Can someone please tell me why joint credit is so bad?

[marty56]

On the BK issue, if you are forced to file, your spouse would still have their credit to be used.

[Anonymous]

Pretty much the previous posts covered the various issues of your question.  I'll just summarize my thoughts:

1.  Individual credit does protect both parties in the event of divorce

2.  Individual credit provides a layer of financial protection in the event of a financial or credit issue of one spouse.  There sometimes comes  time when people find themselves having to choose "WHICH" bills to pay.  In that situation, they may choose to sacrifice the credit of one spouse in order to preserve the other, rather than have both destroyed (which would be the case if all credit were joint).

3.  There is a certain level of ID Theft protection.

4.  If there is a loss/theft of one spouse's card, this does not require canceling cards for both parties

5.  Individual credit may provide a lower utilization of credit percentage.  If a balance is carried on one account, that useage will not impact the other spouses credit.

6.  Often individual credit can provide for MORE credit.  Many CC's issued will be the same CL or nearly the same regardless of whether joint or individual.  For example:  You apply for a Citi card as joint, and get approved for $15k.  However, you may have individually been approved for $15k EACH if applying individually (if credit worthy and income justified).

[Anonymous]

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@Anonymous wrote:

Everyone freaks out when it's mentioned but no one ever says why. Is it just because of possibility of divorce and someone getting screwed, or is there any legit reason, or negative FICO impact, to avoid joint credit?

I'm getting married next month and want to buy a new car within the next 12 months, which me and my wife would both be paying equally towards. It seems like it would be better to do it jointly so that it would add credit diversity and a couple years of on-time intallment loan payments to our credit reports. We'd put a large downpayment and only finance 4,000 of it so it would be easy as pie. Why wouldn't this be a good idea?

Bonus question: Same thing but with credit cards. I understand if you can go the Authorized User route, that's better, but when certain companies don't report AUs to the credit beuraus, why would it be so bad to have a joint card (and we PIF each month).

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I think it's a very personal decision that each person/couple need to make on their own.  My parents, who divorced when I was 20, consistently had credit as joint accounts, they had great credit and worked hard for it.  It caused no problems when they divorced.  

But other people's partners don't have as great credit and some partners can't be trusted with credit.  

Additionally, there are some people who completely keep their finances separate from their partner, separate savings/checking, etc.  And others who do joint.  

I think it's a persona' decision and no one decision is right or wrong it's just what you've decided.  Get all the information out there possible, and then decide for yourself.

Now cosigning I feel very, very differently about.  

[Anonymous]

Thanks, that all clears it up for me. I've decided I'll keep everything separate other than this overdraft protection credit, since it's too much of a hassle to keep separate checking accounts when we combine paychecks and finances.

[Anonymous]

In my experience "His", "Hers" and "Ours" or "Household Account" works really well.

Having separate access/control of funds is very important for both spouses wellbeing!

[haulingthescoreup]

I think by now the other posts have touched on this, but just to clarify:

Yes, no one wants to think about the possibility of divorce, despite the astonishing divorce rate in this country. So we'll let that go for now.

But there are an awful lot of very responsible people who have had to declare personal bankruptcy, mainly because of medical bills or job loss. We're in a very shaky economy, and employers are laying people off AND slashing insurance coverage. It is mind-boggling to see how a fairly common medical event --let's say an MI (heart attack) diagnosed by a cardiac catheterization, and treated by a CABG (coronary artery bypass graft), followed by cardiac rehab and some uber-expensive meds like Plavix, can completely blow you out of the water if you had just lost your medical insurance.

If one half of the couple must file BK, having separate credit means that the other partner can keep the family going with his/her own credit. And when it's time for the BK partner to start rebuilding, the other's cards are great AU candidates. I mention mortgages as being OK for joint, because generally the primary residence is protected from BK.

You don't get any FICO benefits by going joint instead of AU, as long as the CCC reports AU. In the end, it's a lot of credit entanglement, with some potential scariness and no real benefit.

And I hate to say it, folks, but an awful lot of marriages end in divorce. And generally, the non-initiating spouse is caught completely by surprise and is hurt by balances on joint cards and what not. Do a search here on the forums just using the keyword - divorce - and you'll get a sad eyeful.

If you read most level-headed financial advisors, they say to minimize joint credit.

[Anonymous]

To amplify, the longest lasting scar of my divorice was the financial one. It was still healing when I was years into my second serious post divorice relationship. Just say no to joint credit!

As for medical expenses, each day I am older puts me one day closer to Medicare! I feel like putting up a big countdown clock! Cheering for yourself to get older kinda stinks!

[Anonymous]

I am not a lawyer, neither do i have any experience with  this,   but it is my understanding from my family attorney that for married couples you can be held accountable for any debt aquired by your spouse during the marriage.  it seems to me that whether you have the account jointly or seperately if  the account default the other spouse can be sued for the lost.  Florida is one of those states.

if the debt was aquired ie credit card applied for , or established prior to marriage then the spouse is not held accountable. 

Is anyone familiar with this????

[Anonymous]

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@Anonymous wrote:

I am not a lawyer, neither do i have any experience with  this,   but it is my understanding from my family attorney that for married couples you can be held accountable for any debt aquired by your spouse during the marriage.  it seems to me that whether you have the account jointly or seperately if  the account default the other spouse can be sued for the lost.  Florida is one of those states.

if the debt was aquired ie credit card applied for , or established prior to marriage then the spouse is not held accountable. 

Is anyone familiar with this????

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Yes. You have been seriously misinformed. Please reference the below from a FL law firm:

http://www.juliancredit.com/JCM052005.htm

Message Edited by creditwherecreditisdue on 08-26-2009 12:08 AM

[Anonymous]

So far the biggest reason I've seen not to do joint is more paperwork, and needing 2 signatures or whatever to make any changes to accounts. Annoying. I'm not at all worried about bankruptcy or divorce (though I understand those who are, since I make the same pessimistic assumptions about couples I don't know), but since there really are no positives to it, I might as well not subject myself to unnecessary negatives.