Coming clean about your money history with a partner is a critical step in any relationship, especially in order to determine financial compatibility. This process means sharing debt numbers, financial goals, and total net worth. While those numbers do provide insight to your partner’s relationship with money, there is no better litmus test than the credit report and score.
Why the credit report and score is best
Early on in my relationship with my now fiancé, I knew he carried student loans — but after a few years, four I made a startling discovery. His credit score sucked. He logged into Credit Karma for the first time and saw 520 pop up on the screen. He looked more shocked than I.
“How is this possible?” he sputtered.
He’d recently been approved for an auto loan, which was his only real credit history to date. Because he had yet to start paying on his student loans at the time, he wasn’t building any credit history from carrying that debt.
“I’m not sure, but let’s check your report,” I suggested.
A credit score is a snapshot in time — but a credit report details up to seven years of financial behavior. It can show if your partner has missed payments, bankruptcies, and current or previous items in collection. On the positive side, years of on-time payments are detailed on the credit report. Ideally, you'd want to see no blemishes of missed payments or items in collection on a credit report, but that's not always the case.
My fiancé’s credit report showed a medical bill, of which he hadn’t been aware he owed, had gone to collections. That resulted in the abysmal 520 score.
What to do if you unearth a crappy score
The 520 credit score certainly triggered an alarm bell in my head, but didn’t give me reason to bolt because of what happened next. Within 48 hours my fiancé reached out to the doctor’s office and figured out how to pay the item in collections off. Then, at my suggestion, he applied for a secured card which he used to make a small purchase each month and pay off on time and in full to put more positive credit behaviors on his credit report. It's a simple trick, but can work wonders.
If you find yourself in a similar situation, take a pause before plotting your escape. Credit scores get tanked for a variety of reasons besides my fiance's missed medical bill: missed payments, identity theft, lots of inquires all at once, or high utilization on credit cards.
Evaluating the credit report will help you see if your partner is making efforts to improve his or her credit score. Are payments being consistently made on time now? Is the utilization on credit cards going down because debts are being paid off without incurring more? Have items in collections been handled?
An important thing to remember: It takes times to rehabilitate a credit score.
A 600 would seem terrible at first blush, but it might have started at a 520, which means strides are being made by your partner to improve his or her financial life. Or it might just open up the opportunity for education and discussion as to how your partner can improve his or her financial life.
When you should press the eject button
Unfortunately, sometimes the low credit score and the bad credit report are indicative of a destructive relationship with money. If you’ve given your partner the proper tools to improve his or her financial life (particularly education and time), and yet nothing is changing, then it may be time to consider cutting ties.
My tale of credit score horror has a happy ending. My fiancé’s positive credit behaviors moved his score from 520 into the high 600s in less than a year. These days, he competes with me to see who is closer to 800.
Combining finances is a natural progression in many relationships. This could mean opening joint credit cards, shared phone plans, co-signing on loans, or both names being on a lease or mortgage. Missed payments on rent, co-signed loans, credit cards, utilities or phone plans, are all ways in which your credit score could be harmed by a partner.
Constantly worrying about your partner incurring debt, abusing the family finances, or missing payments will add a constant, nagging, low-grade stress to your life that love may not be able to conquer.
Here's a quick credit score cheat sheet:
Below 550: Alarm bells are blaring
550 - 649: Red flag indicating a potentially chronic issue
650 - 699: Room for improvement
700 - 749: Dependable
750+: You're weak at the knees