Avoiding Credit Problems In A Two Income Family

As a two income family, you probably will qualify for more credit than either of you did alone. Responsible use of credit can extend a couple's purchasing power, add flexibility to the monthly budget, and bring more financial opportunities within reach.

Because you both are employed, you already may have credit in you individual names. If not, you may want to establish an individual credit identity. In addition, you may want to establish joint credit accounts. If you are both liable on the account, or if one of you is an authorized user on the other's account, credit histories are required to be maintained in both names. Check with the companies where you open accounts to be sure they are reporting your credit in both names.

When both of you are responsible for debts, try to agree on how you plan to use credit. Paying creditors promptly will help protect your individual and joint credit histories and help you qualify for credit and charge cards, car or furniture instalment loans, and home mortgages.

If you have difficulty paying debts on credit accounts, focus on repaying your current obligations before making additional credit purchases. In addition, you may want to take action to limit the possibility of a negative report on your credit records.

For example:

• If you think you may be late making a payment, contact your creditors immediately, preferably before your payment becomes overdue.
• If your payments are already late, ask the creditors to help you work out a repayment plan; make future payments according to this schedule. You also might ask a nonprofit credit counselling service to help you make payment arrangements and work out a budget.
• If you are offered a debt consolidation loan, carefully review its terms before signing it. Such loans may involve extra costs and may require you to put your home or another asset at risk as collateral.