WASHINGTON -- Women are often told that once they get married, it's imperative that they keep credit in their own name.

By keeping a separate credit history from their husbands, they are instructed, women ensure they will remain credit worthy if they become single again.

Like the petticoat, that advice is old fashioned.

PAY YOURSELF FIRST
by Jesse B. Brown

As this is one of the top seasons for weddings, I thought I might put to rest some misconceptions about couples and credit.

First, here are the primary reasons why a divorcing/divorced/widowed woman would have a problem with her credit history and thus obtaining good credit scores, according to Craig Watts, the public affairs manager for Fair Isaac Corp., which created the widely used FICO credit scoring system many lenders use to determine who receives credit and at what cost:

• She had no credit history as a single woman. If all the reported credit accounts had been in the name of only her husband, the credit reporting agencies would have no credit history on file for her.
• She had bad credit when she was single. Negative information can remain in your credit files for up to seven years (10 years in the case of a bankruptcy). 
• She closes all her joint accounts. If her only credit accounts were joint accounts with her husband and she closed them all, this could create a situation where, after six months or so, her credit file might not meet the minimum requirements for calculating a FICO score, thereby making it more difficult  to meet  a lender's minimum qualifications for new credit, Watts said.

The minimum requirements for calculating a classic FICO score are: at least one account six months old or older, at least one account that has been updated by the creditor in the past six months, and no ``deceased'' indicator on the credit file, according to Watts.

Of course, a divorce could put you in a worse economic position, especially if you were a stay-at-home mom, but your marriage doesn't automatically change the credit profile - good or bad -- you established as a single woman. 

Here are some other credit misconceptions couples have:

Myth: When you get married, your spouse's bad credit history automatically affects your own.

Truth: Couples don't have joint credit scores or credit reports. You are scored based solely on information in your individual credit files. Your credit files aren't merged after a marriage.

Therefore, if you marry a credit-challenged man, you don't inherent his bad credit unless you co-sign with him for new debt or become joint credit account holders. Likewise, your own bad credit doesn't instantly improve if you join financial forces with a better credit catch.

Actually, a woman who married a man with good credit and who benefited from his good history because he put her on his accounts while married might actually end up in a better credit position after a divorce.

Myth: The best way to help your spouse build a better credit history is to make him an authorized user on your account.

Truth: Adding your husband as an authorized user can help him build a good credit history (provided you handled the account well).

 If the creditor is reporting that shared account to at least one credit reporting agency, the account will show up equally on the credit report of both the primary user and the authorized user, Watts said.

However, here's something you should understand about allowing someone to become an authorized user. They get their own card with their name on it. They can use it whenever they want (at least up to the credit limit). The past and future history of the card usage gets reported on their credit file and yours.

But -- this is a big but -- only the person who opened the account is liable for paying off the debt.

If you want your husband to be held responsible for credit charges (and he should), don't just make him an authorized user. Make him a co-signer.

Spouses should help each other build better credit. Just be forewarned that as much as your past good bill-paying habits can bring his credit scores up, his bad habits (left unchanged) can bring yours down.

``The account's history will remain on their credit reports for years to come, so a good history will benefit their future individual scores and a bad history will likely hurt their individual scores until the negative information is eventually removed by the credit reporting agency,'' Watts said.

Myth: You should not close joint accounts when divorcing because it will hurt your credit score.

Truth: Closing accounts can make your credit score drop. That's because closing a joint account may affect the credit utilization rate. Credit utilization rate is determined by dividing the outstanding debt by the total available credit for individual accounts and, separately, for all open revolving accounts together.

Once you're headed for a divorce, then close joint accounts. Don't be so concerned about your credit score that you put yourself in the position of being responsible for debt incurred by a former spouse.

The point to all this is the way credit is determined now, you don't lose your credit individuality once you get married.

Listen to Michelle Singletary discuss personal finance every Tuesday on NPR's ``Day to Day.'' To hear her reports online go to www.npr.org. Readers can write to her c/o The Washington Post, 1150 15th St., NW, Washington, D.C. 20071. Her e-mail address is singletarym(at symbol)washpost.com. Comments and questions are welcome, but due to the volume of mail, personal responses are not always possible. Please also note comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

(c) 2006, Washington Post Writers Group