Beware of "Ghosting" Your Spouse Credit-wise

Being the more detail oriented, organized and proactive person in our marriage, I have been the one to apply for any credit cards, making my husband Rich a secondary card holder.  I am also the registered owner for utility bills such as phone, cable, internet and cell phones.  All of our bank accounts are joint and the only accounts actually in his name alone are his RRIF and TFSA.  There is an unfortunate side effect of this which did not become apparent until the day Rich tried to open his own EQ Bank savings account.

We found out that Rich now has an extended period with no "credit history" even though he has been spending regularly on his credit cards, for which I pay off the entire balance every month.  He does not even have an easily accepted secondary "proof of identity" since his name is not on any of our utility bills, which seems to be the defacto identification criteria requested by many institutions.  After providing his driver's license, we realized that he could not produce any of the requested additional bills or statements that had just his name on it.  Even our property tax statement lists both of our names with mine is listed first.  Eventually he was able to use his T4RIF statement to confirm his identity and was able to successfully open the bank account.

However,  this did not help with Rich's lack of credit history, which is defined as "A consumer's ability to repay debts and demonstrated responsibility in repaying debts."  Your credit score is calculated by totaling points assigned based on:

• Payment history - how promptly and completely you pay off your credit debts
• Debt level - the amount of available credit that is used up each month
• Credit history - the amount of time you have held each type of credit
• Types of credit - whether you have credit cards, line of credit, mortgage, car loans, etc.
• Requests for new credit - each new request decreases your credit score

Other than our credit cards, which are all in my name, we have no debt.  We paid off the mortgage on our home over 15 years ago and do not have any outstanding loans or even a line of credit.  This leaves Rich with a low credit score, since he has no types of credit to generate payment history, credit history or debt levels.  Despite not being over-extended with debt and my always paying off the little debt that we owe on our credit cards, Rich gets no credit (pun intended) for being a good loan risk.  It probably does not help either that we have been retired for over 7 years now, and therefore do not have recent employment history or income.

It has become a bit of a catch-22.  Rich has tried to rectify the situation by applying for one of the higher-end credit cards under his own name, but was rejected even though he can prove that he (as well as we as our household) have more than sufficient funds to support such a card.  Most recently we wanted to get a BMO World Elite Mastercard which has many perks including 4 free airport lounge passes per year and is currently under promo for 1 year no service charge.  As expected, Rich was declined by the automatic online assessment, but this time we made an appointment to speak to a BMO Personal Banking rep at our local branch.  We went armed with proof of income in the form of several years of income tax statements, along with an explanation as to his lack of credit history.

It took several days involving communications with more senior loan officers who wanted to see further proof of liquid assets, but Rich finally qualified for this credit card.  Now he needs to establish a better credit score by retaining the card for more than a few months, spending on average less than 35% of his available credit limit, and paying off the full amount owed every month.   Let this be a lesson learned for couples who allow one partner to generate all the credit history while the other partner has none.  All the bank representatives that we spoke to commented on how often they encountered this issue.  Once this happens, it becomes a big pain to try to resolve the situation.