Credit Accounts: Individual vs. Joint
When you apply for credit (such as a credit card or a mortgage), you will need to choose between an individual and joint account.

In an individual account, your own income, assets, and credit history are considered. Regardless of whether you are married or single, you alone are responsible for paying off the debt. The account will show up on your credit report and may also appear on the credit report of anyone you appoint as an “authorized user” of your account (such as a spouse).

However, laws differ according to where you live. Take note that if you live in a community property state, such as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, you and your spouse may be responsible for debts incurred during the marriage. This means that the individual debts of one spouse may appear on the credit report of the other.

An individual account has its advantages in that only you are responsible for it: no one else can negatively affect your credit record. However, if you have a low-paying or part-time job, or do not work outside the home, you may have difficulties in getting credit without including your spouse’s income. As with all money matters, it depends on your unique situation.

A joint account, on the other hand, includes both you and your spouse’s income, financial assets, and credit history collectively. Both of you are responsible for ensuring that debts are paid, and joint accounts will appear on both of your credit reports. Obviously, there is benefit here in that collectively, your financial picture may prove much stronger in helping to get credit. However, you are also both responsible for the debt, even if you divorce and separate debt obligations are assigned to each spouse. The danger here is that a bitter ex-spouse can seriously jeopardize your credit history through these jointly-held accounts.

What happens when you divorce?
If you are considering divorce or separation, pay special attention to the status of your credit accounts and note the following:
• If joint accounts are maintained, make sure you make regular payments during this interim period so that your credit record won’t suffer. As long as there is an outstanding balance on a joint account, you and your spouse are responsible for it.
• If you divorce, consider closing joint accounts or accounts in which your former spouse was an authorized user. Alternatively, you can ask the creditor to convert these accounts to individual accounts.
• By law, a creditor cannot close a joint account because of a change in marital status, although a joint account can be closed if either spouse requests it.
• A creditor is not obligated to change a joint account to an individual account: They may require you to reapply for credit on an individual basis.
• In the case of a mortgage or home equity loan, a lender is likely to require refinancing to remove a spouse from the obligation.