Transfer Credit Card Debt

How can I get my spouses credit card debt put into my name so all our debts will be mine?

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Bad credit can have an impact
Bill's Answer: Answered by Mark Cappel

There are two means to assume liability for your spouse’s debt. You can transfer all or a part of the balance from one account to another. Or, you can refinance the account in question in your name. Let us look at both.

Transfer Balance

Moving a credit card balance from one person’s credit card account to another person’s credit card account is relatively easy. However, this assumes two things. First, it assumes that the second person has a credit card account. Second, it assumes the second person’s credit card account has enough of an available balance to handle the incoming debt. If both assumptions are true, then simply contact your card issuer and explain that you want to transfer the balance of another person’s account to yours, and they will either do so electronically or issue you a check-like document that the other person will send to his or her card issuer and the balance transfer will occur. Either process is much simpler than I described here.

Refinance

The other way to assume another person’s credit card debt is to refinance the account. To refinance, you and the account holder contact the card issuer and do one of two things. Either add your name to the account as a joint account holder. Or, simultaneously add your name to the account and remove the other person from the account. Your credit history will be reviewed along with your income and DTI during this process. You will be added as joint account holder or the sole account owner if you qualify.

Credit Score Impact

It is important to understand how your credit score is calculated. The credit reporting agencies base their credit score calculations on the following five variables.

Payment History

Counts for approximately 35% of your score. It is the most heavily weighted factor used in calculating a credit score. Consistently paying bills on time has a positive influence on a score, while late or missed payments will hurt you. If you have delinquent payments, the older the delinquency the less the negative impact on your score will be. Collection accounts and bankruptcy filings are also taken into consideration when analyzing your payment history.

Total Debt & Total Available Credit

Counts for about 30%. This section looks at how much debt you have compared to the total available credit on your accounts. If all of your accounts are maxed out, you will be considered a poor credit risk, because it appears that you are struggling to pay off the debt you have already incurred. If your account balances are relatively low compared to your available credit, this part of the risk analysis should help your overall credit score. The score calculation also looks at these two factors independently. Having too much available credit, whether you have used it or not, could hurt your credit score, as statistical studies have shown that people with excessive amounts of available credit are a higher credit risk. Unfortunately, the bureaus do not define exactly what they consider excessive, so best tip is to use credit conservatively and to keep your debt to credit limit ratio low.

Length of Positive Credit History

Counts for about 15%. The longer you maintain accounts in good standing, the better your score will be. This shows that you are able to make a long-term commitment to a creditor and are consistently responsible about making your payments.

Mix of Types of Credit

Counts for approximately 10%. Having several different types of credit, such a credit cards, consumer loans, and secured debt, will have a positive influence on your credit score. Having too much of one type of credit can have a negative impact.

Number of Credit Applications Completed Recently

Counts for about 10% of a score. Applying for too much new credit in a short time period makes indicates that you could be credit risk, as you may be desperately trying to keep your head above water. The models make an exception for people who are shopping around for a loan, so if you are simply applying to see who can give you the best rate on a new loan, you need not worry too much about damaging your credit score.

Calculating the Impact of a Balance Transfer

Although you cannot calculate your own credit score accurately, you can review your credit report for the five factors listed above to get an idea of whether the accounts listed on your credit report are hurting or helping your credit score. Factors such as age, sex, income, and length of employment, have no direct affect on your credit score, and are not considered when the bureaus calculate your score.

Keep in mind that for most lenders, your credit score is only one aspect, albeit an important one, of your overall “credit worthiness,” meaning the creditor’s view of your ability to repay a loan. Your income, for example, is not considered in the calculation of your FICO score, but most lenders will ask you what you earn to analyze your ability to repay the loan. Even if you have an 800 FICO score, if your income is $10,000 per year, a lender will probably not loan you $1 million (to pick a large number for example), because despite your past credit habits as measured by your FICO score, the lender can see that you probably cannot afford to repay a large loan.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

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