Marriage, Money, and Credit
Marriage began as spiritual union between two people. In today’s world, it is a legal and financial union of both assets and debt. It’s also a merging of credit. People entering a marriage are usually thinking about merging their belongings, family holidays, etc., not their credit reports. Knowing what your partner’s credit history is prior to tying the knot can provide some insight into their outlook on money matters.
Not a very romantic a notion, is it? More than any other single issue, money problems can prove divisive for even the most devoted of couples. Rather than discover too late that your beloved lacks the ability to manage his/her finances, talk about it up front. Discuss what expectations and objectives you each have regarding spending, savings, retirement, etc.
In addition, be realistic about the impact of merging your credit and finances with another individual. If your potential partner has poor credit and you don’t, having joint accounts can potentially have an adverse affect your credit scores.
However, keeping finances separate only works well if both parties are open and honest with each other about their spending habits. Concealing credit card bills, purchases, etc. from your spouse will only spell trouble for you both down the road. In some states, even if accounts aren’t joint, each spouse can be liable for any credit debt incurred during the marriage.
Unfortunately, couples that don’t communicate honestly and clearly about their spending money habits often find out too late that they have a problem. (e.g. Going to purchase a new car and discovering their partner’s credit is too poor to qualify for the auto loan. Finding out your spouse has over-extended themselves on credit cards when applying for a home mortgage. Learning your spouse filed bankruptcy at some point in the past. Discovering your spouse defaulted on a student loan.)
The best way to protect yourself, your credit and your future earnings and savings is to seek out the advice and assistance of a qualified financial advisor before you say the “I dos”. Discuss your habits, expectations, etc. openly and determine upfront what the “ground rules” for money management are going to be for you and your partner. Learn what type of credit history your future partner has. If s/he has credit problems, find out what you can do now to mitigate them and reduce their impact on you once you are legally married.