Finding a long-term partner, a boyfriend, girlfriend or spouse can be a long and challenging road. If you’ve managed to snag that special someone only to discover that his or her credit history is less than stellar, while you may be tempted to overlook it, don’t.
Of course, money isn’t everything, and it’s noble of you to put love ahead of financial security. But do keep in mind that if you’re not careful, your partner’s bad credit can easily wind up impacting your finances and your relationship.
What Could Go Wrong?
Monetary repercussions: Your partner’s poor credit can render your otherwise impressive credit score relatively useless. If you’re applying for a joint loan don’t assume that your financial standing will automatically compensate for that of your partner. You may still find yourself presented with high interest rates or, in some cases, denied completely — at which point you’ll be forced to re-apply on your own and take on all the responsibility yourself, or put off a major purchase that significantly impacts your lifestyle. This especially holds true if your partner has previously filed for bankruptcy. While bankruptcy is often hailed as a fresh start for the financially impaired, the reality is that after a personal filing it can take anywhere from one to four years to become eligible for a mortgage.
Emotional backlash: When you and your partner come into a relationship with uneven credit histories it can make for some bitterness and conflict. If you’re the one who’s always been financially responsible, you may quickly grow to resent the fact that your partner’s poor habits have now put a damper on everything you’ve worked for. You may also come to regard your partner as a burden, especially if you’re frequently being asked to foot the bill or shell out the cash for things you’d otherwise be splitting equally. Don’t forget, even if you’re not at that stage where you’re ready to live together or think about marriage, you could still wind up on the hook for your partner’s bad financial habits if they need you to co-sign an apartment lease or car loan.
Now think about it from your partner’s perspective. He or she doesn’t want to feel like a drain on your resources. But if your financial position is significantly more secure, the probability of that happening is much higher. Your partner may even come to resent you for being the one in the more powerful position, even if you go out of your way to avoid making your partner feel small.
What to Do
While you can’t erase your partner’s poor credit history, there are steps you can take to preserve both your finances and your relationship. First, you may want to avoid opening joint bank or credit card accounts until your partner shows some financial improvement. If you’re living together or getting married, you can retain your own accounts and devise a system for splitting expenses while paying for them separately. Also, consider waiting to make big purchases — especially things like vehicles and homes. Finally, be completely open with one another and define your expectations. It’s one thing if your partner has made some financial mistakes in the past, but be clear about what you’re willing to tolerate going forward. Establish monetary ground rules and goals and do your best to treat your partner with respect. With your support, they may become even more motivated to make better financial decisions.