How getting married impacts debt, taxes and credit

Merging lives means merging financial situations, even if you keep your bank accounts separate. Each person brings to the relationship their own financial history, and that might include student loans or other debt.

Before your wedding day, it’s a good idea to review your finances together so there won’t be any surprises. This can also help you decide how to plan for future expenses, including paying down debt.

How do student loans impact marriage?

According to Forbes, student loan debt is the second-highest consumer debt category in the United States. More than 44 million Americans have student loan debt. It’s possible that you’ll be marrying someone with student loan debt, or you may have student loan debt yourself. 

Even if the debt is only in one person’s name, it can still affect both partners. That’s because money needs to be allocated each month to paying off that debt, and the process can take time, depending on how much you owe and the length of the loan term. Paying that money back affects your cash flow and savings.

If you accumulate student loan debt during marriage, that can also affect both partners, especially in a community property state. That’s true even if the loan is only in one person’s name.

Does getting married affect your credit score?

The way marriage affects credit scores is complicated. While your credit score shouldn’t be directly affected by your spouse’s student loans, if the loans were taken before getting married your spouse’s credit score will influence the interest rate a lender offers when you're applying for additional loans together.

That means if you apply for a mortgage or car loan together, the lender will look at both credit scores when determining the rate. Having student loan debt doesn’t mean the credit score will be lower, but it can hurt your ability to get additional loans because the lender looks at the debt-to-income ratio to determine your creditworthiness. If those student loans aren’t being paid back on time, it can affect your spouse’s credit score, which can impact a joint loan application.

Unless you take on joint debt or open a joint account (a credit card or mortgage together, for example), your credit shouldn’t be mingled. However, with a joint account, each person is jointly responsible for paying those bills. That means if your partner doesn’t pay the credit card bill, for example, you could be responsible for the entire thing, even if they weren’t charges you personally accrued. A late payment will show on your credit score, even if your spouse pays the bills. Any credit ding on those joint accounts hits both of your credit scores.

Do you get more income tax being married?

Marriage can affect the amount of income tax you pay. If you have low income and your spouse earns a higher income, you may go into a higher tax bracket with a newly combined figure by filing jointly; that is, your household is treated as a unit. 

When you pay more in taxes, after getting married, people call that a marriage penalty. It’s possible, though, to pay less in income taxes when married, and that’s called a marriage bonus.

You’ll want to speak with a tax specialist about how getting married will affect your tax rates to plan in advance and know about the possible financial changes that may result.

Before getting married, it’s also a good idea to speak with a financial professional about the implications of taking on debt for one spouse when married and the possible outcomes of one or both spouses having debt before marriage. With a plan in place to handle the debt, you’ll have a smoother marital transition.