How marriage might impact a spouse's credit report

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Q: I'm getting married soon and have some bills. After I'm married, will they go on my husband's credit report, or just stay on mine?

Mary, via e-mail

A: For credit-reporting purposes, "debts are associated with a specific Social Security number," says a spokeswoman for Experian, a national credit-reporting service. So your present debts will remain linked only to your Social Security number. If you buy something jointly, however, the debt will go on both your accounts.

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One caveat: If a spouse becomes "uncredit-worthy," or overly indebted, that may make a lender skittish about lending to the credit-worthy spouse, some family-practice attorneys say.

Q: I have some $40,000 in savings bonds. Most have reached face value. They are in my name; my wife is co-owner. Can we add our grandson as another co-owner? We want him to have the money for college. Will we incur a tax liability if the bonds have to be reissued?

K.S., via e-mail

A: At this point, "you can't add your grandson, because the maximum number of owners on a savings bond is two," says Daniel Pederson, author of "Savings Bonds: When to Hold, When to Fold." "You could remove one of the two co-owners, however, and have the bonds reissued."

If you remove the second name (presumably your wife's), that is a nontaxable event," Mr. Pederson says. But if you remove the primary owner (in this case, you), "that becomes a taxable event" - just as if you had cashed out the bond.

He adds that the bonds would not qualify as tax-free education bonds by putting the child's name on them. (To gain that status, the bonds must meet certain requirements. Check with the US Savings Bond program at 800-US Bonds.)

Finally, your grandson may be unable to attain student loans if he has a large amount of money in nontax-qualified savings bonds.

Q: A friend told me that if I bought individual bonds, I should almost always go with municipal "go" bonds. What are they?

G.W., New York

AGo bonds are "general obligation" bonds issued by municipal governments. They usually carry a fairly high interest rate and are backed by the full faith and credit of the municipal agency issuing the bonds. Make certain the bonds are AAA or AA rated, bond experts say.

Questions about finances? Write:

Guy Halverson

The Christian Science Monitor

500 Fifth Ave., Suite 1845

New York, NY 10110

E-mail: halversong@csps.com

(c) Copyright 2001. The Christian Science Monitor

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