Not to take all the romance out of young love, but the Dallas Morning News had an excellent column today about checking someone’s credit before you get too personally involved with them. Excerpts follow, and they’re good tips. But this is something should to do before you’re too deeply in love for it to make a difference.
Marriage is as much a financial partnership as it is an emotional one, and you need to go into it with your eyes wide open.
“Before you get serious with someone – certainly before you step to the altar – you want to know how your financial lives are going to commingle,” said Craig Watts, spokesman for FICO, the company that developed the widely used credit score.
Decide who will handle the bill-paying responsibilities and how the bills will be divvied up.
One reader told me that he and his fiancee exchanged their credit reports and scores before they married. That’s not a bad idea if you’re both comfortable with that.
“Your FICO scores offer a neat snapshot of how you’ve each handled your money – student loans, car payments, credit cards,” said Deborah Owens, author of A Purse of Your Own, an investments and financial book for women. “FICO scores will reveal who has more financial acumen and if there are areas that the two of you need to address.
“You fell in love with the man and not his money,” she adds, “but how he handles his finances can tell you a lot about his values, character and future money behavior.”
At some point during your marriage, you will undoubtedly think about purchasing a home or car, so you’ll want to know your future spouse’s potential for qualifying for new credit.
“You’re not just mingling your personal life with this person,” Watts said. “You’re also mingling your aspirations and your ability to achieve those goals. Not having your eyes open on any liabilities when it comes to the financial side means you really are walking blind into your future.”
There’s one misconception I want to clear up. Some people think married couples have one credit score and one credit report. Not true.
“Some people think that once you get married, then your credit histories must get mingled at the credit bureau so now you have a joint credit score,” Watts said. “You always have an individual credit score based on your personal history.”
However, if you get a joint credit card account or co-sign for a loan with your spouse, “now your credit reports start looking more similar,” he said.
And if your spouse forgets to make the loan payment on that joint account or co-signed loan, your credit will be hurt along with your partner’s.
If both of you need a loan and you’re the one with good credit, you should apply for credit based on your credit history.
So be honest and discuss finances with your partner because his or her financial burdens will affect your credit.
“You’re talking about a lifetime commitment here, and you want to make sure that you understand the risks that you’re taking by mingling your future with your partner,” Watts said.