I’ve written numerous times that marriage is as much a business partnership as it is an emotional one.
Now comes information suggesting that the credit history each person brings into the union has a strong bearing on the success or failure of that partnership.
“Nobody wants to admit that credit reports and credit scores have value in determining with whom to have a long-term intimate personal relationship,” said John Ulzheimer, credit expert at CreditSesame.com.
“However, far too many couples ignore the topics of finance and debt until after they’ve gotten married, which is a recipe for disaster. You don’t want to learn your new spouse has excessive debt and poor credit scores on your honeymoon.”
The issue has caught the attention of Federal Reserve economists Jane Dokko and Geng Li, who are working on a forthcoming report on the role of credit scores on the dissolution of households.
The researchers looked at the individual credit scores of millions of couples from 1999 through last year to gauge their financial compatibility. The preliminary results show that the larger the disparity between their scores, the higher the incidence of break-ups; the closer their scores, the less likelihood of divorce.
So as part of getting to know each other, make sure you’re compatible in your financial practices.
“While credit scores are not specifically designed to do anything other than to predict risk, they have become effective at predicting whether or not a marriage will survive long term,” Ulzheimer said. “The theory that couples tend to last longer if they have similar credit-related attitudes and practices has been proven true.”
Credit scores have become a proxy for our credit attitudes and management practices, he said. Dokko and Li also say credit scores are a proxy for trustworthiness by measuring the likelihood that an individual will honor a debt obligation.
“That credit score has value in determining whether or not you should get into a long-term relationship with someone,” Ulzheimer said. “If your credit score is significantly different, higher or lower, than your soon-to-be spouse, then you two have very different credit experiences and likely have different credit management attitudes, which does not bode well for a harmonious relationship.”
Furthermore, Ulzheimer said, “poor credit not only can doom a marriage, but it can also bleed on for many years after a divorce if you had chosen to apply jointly with a now ex-spouse for credit cards or loans.”
That could put your solid credit record at risk, he said.
“Divorce does not remove your obligation on joint credit accounts,” he said, “but your ex-spouse may be assigned payment responsibility, thus putting your solid credit scores in harm’s way if he or she misses payments, which their low scores indicate they probably will.”
So, as uncomfortable as the subject may be, talk this out before you get married. You may have differences, but is the gap too wide to overcome?
“It’s much easier and better for everyone to get it out on the table well in advance of getting married so that you can have an honest discussion about whether your attitudes toward credit and money are consistent or, if not, can be overcome,” Ulzheimer said.
ABOUT THE WRITER
Pamela Yip is a personal finance columnist for the Dallas Morning News. Readers may send her email at firstname.lastname@example.org; she cannot make individual replies.
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