Just Married: Reasons To Talk About Your Credit Score Before Marriage
Why should you talk about credit when you are getting married? Isn’t it all about your love and how you feel about each other?
Apparently not.
While love is a very powerful emotion, it is not the end-all and be-all of your marriage. According to FamilyCouncil.gov, financial stress is a strong reason for divorce – especially among those in the lower socio-economic status. Negative money issues can create marital instability and this is the main reason why you need to talk to your soon-to-be-husband about your credit life before you get married.
Your credit score is an important part of your financial life. According to TransUnion, this score will help lenders gauge if you are a safe borrower. It shows your financial reliability and credit average. If you have a high score, that speaks positively about your credit behaviour. It shows that you can be trusted with the use of credit and they do not have to worry about you not paying them back.
This is the very reason why you need to check each other’s credit before you get married. After your wedding, you will now be one with your spouse. Everything he owns will technically be yours, and vice versa. His actions and yours will reflect on you and your relationship. While his debt in the past will not reflect on your own credit score, it can hinder you in so many ways.
Will your spouse’s bad credit affect yours?
Let us get one thing straight. You will not share your credit score with your spouse. It will remain to be yours alone and will reflect your own decisions only. The same is true with your spouse. However, there may be transactions that will be affected if you or your husband-to-be has less than stellar credit scores.
Future joint accounts.
In case you plan to open a joint account, both of your credit scores will be considered. For instance, if you open a joint credit card, the interest rate of this card will consider both of your credit scores. If one has a bad credit history, the good one can pull it up, but it will still be compromised. That account will be given a higher interest rate than what the one with the good credit score would receive on a separate card. Not only that, the activities in this joint account will be reflected in the credit report of both spouses. If one of you uses that account irresponsibly, both of your credit scores will suffer.
Future joint loans.
Another area that will be affected by the bad credit of one spouse is future loans. If you plan to borrow money for a mortgage, you would need to pool your resources so you can be approved for a higher loan. That means both of your accounts will be viewed by the lender. Like with the credit card, it can affect your application and the interest rate that will be approved. You might end up with a higher interest rate – which will cost you more money in as you pay off the accruing interest of your loan. Usually, a score of 700 or lower will be given a higher interest rate.
Understanding the credit behaviour of your husband-to-be will help you get an idea about his money management skills. Even if you find out that he made mistakes in the past, your love for him should not be affected. At the very least, this knowledge will allow you to identify potential behavioural problems that you should work on as a couple.
Tips to help your partner get a better score
Working on a financial behaviour can be hard – this is why you need to do it as a couple. Ideally, you want to work on this before you get married and as you go start your journey as a newly-wed couple. It will take a long time to complete – especially if you have to break habits that you had been practising for a long time. But as you go on this task together, it can make your marriage stronger and more fruitful.
Here are some tips that can help improve your credit behaviour:
Start with a household budget.
This is a great way to start when it comes to building financial habits. You can talk about your combined incomes and the expenses that the two of you will pay for. You can list the bills, debts, and other expenses that you will incur as you start your new life together.
Create a spending plan.
This will help you discuss the spending limitations for the house. You can also include the budget that the two of you can spend on personal items. This will keep the two of you in check – especially the one with the spending and credit problem. Anything that is beyond the spending budget should be discussed before it is bought.
Set financial goals.
This is a great way for the two of you to work on your future together. Forget about the events of the past and the wrong decisions that led to a less than stellar credit score. Learn from them and then move on. Focusing on goals for the future is a great way to accomplish this. If anything, your future goals can motivate you to make the right choices when it comes to money.
Have an emergency fund.
This is a great way to make your household finances secure. According to the study from Family Council, the people who usually fight about money are those who do not have much of it. An emergency fund is a great way to compensate for a low income. Even if you encounter unexpected problems, you do not have to worry about borrowing money or compromising existing expenses. You can dip into your savings to bail you out of a tough financial spot.
Set an example.
If you are the one with the good credit habits, it is your responsibility to set a good example. If your spouse is paying off a debt that they had while single, you can help them out or at the very least, you can make the same sacrifices that they are doing. That way, they will not feel too bad about the sacrifices that they are forced to make.
Support each other and understand mistakes.
Expect that your spouse will make mistakes now and then. A habit is hard to break. Just be understanding yet firm about your resolve that they should change their bad credit ways.
Having a good credit as you enter into your marriage is a great way to start your life as a married couple. Make sure you are ready to support each other – in wealth, debt or otherwise.
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