Avoid These 5 Credit-Damaging Risks When Combining Finances Before Marriage

Top Stories World's Healthiest Country Are You Saving Enough? 8 European Villages For An Affordable Retirement Buffett's Warning About AI Table of Contents Expand Table of Contents 5 Financial Pitfalls for Unmarried Couples How to Share Finances Without Sharing the Blame If the Damage Is Already Done Combining finances can be tricky, especially when your credit score is on the line. PeopleImages / Getty Images Close Key Takeaways Co-signing loans and opening joint credit accounts can damage both partners' credit scores if payments are missed.Unmarried couples lack legal protections for shared finances, making cohabitation agreements a smart option.Refinancing joint loans and closing shared accounts can help untangle finances after a breakup. Get personalized, AI-powered answers built on 27+ years of trusted expertise. ASK Love may be unconditional, but credit is not. Partners who mingle their money often learn the hard way that being relationship-ready doesn’t necessarily mean you’re finance-ready. One late payment, one overspent account, one loan gone bad, and your credit score could suffer. Combining finances can feel like a natural expression of commitment, just like splitting rent, opening a joint account, or co-signing on a car. But unlike married couples, unmarried partners have virtually no legal framework protecting them if things go wrong. Without the legal protections marriage affords, you’re essentially trusting your partner with your credit—and hoping for the best if things go south. That’s not to say couples should avoid a joint financial life. Many happily unmarried couples choose to share expenses. The key is to do it with your eyes open, and a few safeguards in place. 5 Financial Pitfalls for Unmarried Couples Co-Signing on Loans When you cosign a loan, you become an equal borrower in the eyes of the lender. You’re assuming equal responsibility for repayment. Late payments on the loan will hurt both of your credit scores. The loan also has its own term—so if your relationship ends, the loan doesn’t. If you cosigned already, talk to the lender about a cosigner release option or see if you can refinance the loan under one person’s name only. Joint Credit Cards Similarly, joint credit cards should be handled with caution. Late payments will ding both of your credit scores. High credit utilization hurts your scores, as well—so if your partner goes on a shopping spree, you'll feel it, too. And closing an account after a breakup may do more harm than good, as it lowers the average age of your credit accounts. This could lower your score. Instead of sharing a joint credit card, consider adding your partner as an authorized user on your account. You can set spending limits and alerts for this authorized user. Shared Rent or Mortgage If your name is on the lease and your partner doesn’t pay the rent, you’re on the hook for the entire amount, as far as your landlord is concerned. For unmarried couples purchasing property together, the stakes are even higher: without a legal agreement, a breakup can trigger costly disputes over equity, mortgage responsibility, and who gets to stay. Unclear Spending Responsibilities When you’re sharing finances with someone, having a “we’ll sort it out later” attitude can hurt you both if one person overspends or has an irregular income. Instead, make a plan together, and try to stick to it. Create simple rules: follow a shared monthly budget, a spending threshold that requires a check-in (say, over $50), and a clear split of who pays for what (50/50, proportional to your incomes, or simply “you cover X, I cover Y”). Thinking Marriage Will Solve Everything Joint finances aren’t magically erased by wedding vows. Outstanding joint debts remains on both of your records, and damaged credit doesn’t bounce back just because you wear a wedding ring. In fact, money woes are one of the top predictors of divorce—and marrying into debt can start you off on the wrong foot. The silver lining is that marriage will allow you to file taxes together and grant you inheritance rights you would not otherwise have. But as far as credit scores and outstanding debt are concerned, getting married has no effect. How to Share Finances Without Sharing the Blame It’s not cynical to want to protect your credit score before merging finances with your partner. It’s smart. Tip Don’t co-sign on loans unless you’re willing and able to pay the loan back by yourself, and create a system of rules for joint expenses. If you live with your partner, a cohabitation agreement might be a smart idea. It spells out who is responsible for certain shared expenses and accounts, and what happens to those assets if you break up. It's the unmarried equivalent of a prenuptial agreement, and it's increasingly common. Related Stories LGBTQ+ Marriage Benefits: Financial Advantages & Personal Perks Applying Economic Theories to Strengthen Marriage If the Damage Is Already Done The first step to cleaning up joint accounts is untangling them. Talk to your lender about refinancing any loans that are in both of your names into your name or your partner's name only. Cut up that shared credit card, or freeze it (yes, literally) so you both have to authorize charges. Finally, work on rebuilding your credit with on-time payments and lowered credit utilization. Sharing your life with someone doesn't require sharing every financial risk. Protect your credit now, and you'll build a stronger foundation—whether the relationship leads to the altar or not. Article Sources Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Sallie Mae. "Apply to Release Your Cosigner." Car and Driver. "How to Remove a Cosigner from a Car Loan: 4 Ways." Wells Fargo. "How to add an authorized user to your credit card." US News and World Report. "What Are Cohabitation Agreements and Who Are They For?" Cornell Law School. "Cohabitation." Compare Accounts Advertiser Disclosure × The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. 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