Civil Unions and Couples Credit

Civil unions, which have been adopted mainly for same-sex couples, are still in their infancy in the United States. There is plenty of controversy surrounding this concept, particularly from the conservative point of view, and only four U.S. states currently recognize them (VT, NH, NJ, CN). Political issues aside, however, there are a few implications of a civil union that many people simply don’t consider.When two people get married, the federal (and consequently the state) government recognizes their credit profiles as joined. The two individuals might have radically different credit scores, but they share the same debt, and one partner’s mistakes might negatively affect the couple for loans and lines of credit. With civil unions, however, credit issues become muddled because the federal government does not recognize the union as legal.

In 1996, the federal government passed the Defense of Marriage Act, which states that even though individual states can adopt Civil Union laws, other states are not obligated to recognize them and they are not legally entitled to the same rights as married couples. For example, if you enter into a civil union in Vermont, which began allowing them in 2000, you might find that your situation changes if you move to Texas or Arkansas.

This obviously impacts couples credit because your credit profiles are not legally joined. You might have a more difficult time applying jointly for a loan or a credit card. Legally, civil unions are not a means of establishing kinship, which means that you aren’t technically “related” to the person with whom you establish the union.

It is important to remember that no two people—whether married or joined by a civil union—share credit scores or profiles together. However, it can be difficult to encourage financial institutions to recognize a partnership when applying for loans or lines of credit. They might weigh a poor credit score more heavily than they would with a married couple, and there is always the possibility of encountering personal bias among lenders.

The good news, however, is that you shouldn’t have a problem in states where civil unions and registered partnerships are covered under the law. In Connecticut, for example, couples bound by civil unions are granted every right and freedom of married couples except for the title of marriage. They have housing rights and kinship rights and should not have a problem with sharing finances.

If you are a member of a civil union, the best thing you can do is be open about your situation. When you talk to lenders and bankers, let them know that you are a registered couple up front so that there are no problems with miscommunication. If you decide to apply for a personal loan or auto loan jointly, indicate as much before you begin the paperwork. This will make the entire process much easier.

If you do encounter problems, be adamant about the observations of your rights. Lenders are not legally permitted to discriminate based on sexual orientation. However, if you feel that you are being judged based on you and your partner’s relationship, it might be better to find a different financial institution at which to conduct your business. Financial matters are much easier to deal with when added stress doesn’t accumulate.

You will also find that, with civil unions, separating from your spouse might not be as easy when it comes to financial matters. Legally speaking, there are no rules or guidelines to dividing assets when the members of a civil union separate, which means that all of those issues must be worked out between the two individuals. It is always a good idea to discuss this matter before committing, then write down your intentions if you and your partner ever decide to call it quits.

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