You finally found your soul mate — someone who is sympathetic, nurturing, loving and caring. You’re ready to tie the knot. But before you say, “I do,” can you honestly say, “We did?” No, I’m not talking about that. I am talking about the talk. Not the one about sex and family but rather the one about money and credit.
Buzzkill? Reality testing? Yes. However, you both need to ask:
- What do your credit reports say, and what do they say about you?
- What are your respective credit scores?
- How much debt is each of you carrying?
- What would your combined debts look like?
- Is your fiancé a big spender or a saver?
If you’re ready to take the big walk then it’s time to have that talk and here’s why it shouldn’t be delayed until after the rings are slipped on your fingers and the limousine is racing to the wedding reception or the airport.
The sooner both of you discuss your personal financial preferences, credit standings, individual spending habits and joint future goals, the sooner you can identify and hopefully avoid major problems.
Most people recognize that money and sex are two major potholes that can trip up happily married couples and lead to a rocky road of conflict, distress and disputation. And, as you are now a couple, it’s good to get into the habit of joint problem solving and negotiating so you can set the stage for a sustaining dialogue that fuels togetherness and intelligent conflict resolution.
Public Enemy Number One: The Debt Trap
Fact: The longer you can avoid plunging into debt and all of the traps that come with achieving instant gratification and overspending, the better you’ll be prepared as a couple to save for the things you want, get ready for little bundles of joy, and build your retirement nest egg. In addition to the size of your investment accounts, the health of your credit is paramount.
Unfortunately, many couples enter a marriage with credit baggage. Like a suitcase that is so stuffed all of the clothes can’t be jammed into it, one spouse and sometimes both may have overspent in their previous lives, racked up significant debt and made mistakes that severely damaged their credit. While one partner’s bad credit score won’t damage the score of the other, it could inhibit their ability to jointly purchase a home or a car at an affordable price, and must be addressed as early in the relationship as possible.
The Friend of the Court: Building a Strong Credit Profile
It is important that when entering into the bonds of holy matrimony, each partner must commit to building a strong individual credit profile while building a solid joint credit history. That means keeping debt under control, cutting costs where appropriate, merging expenses with a prospective life partner to get the benefits of “economies of scale,” making all payments in a timely fashion and not overspending. Here are some other useful tips:
- When planning the wedding, don’t take on suffocating debt to stage the event of the century at the most spectacular venue in town. If you’re paying for it because your in-laws can’t afford it, be sensible about the ceremony and reception and splurge on the honeymoon (if you must). Creating five- or six-figure debt to finance your wedding and honeymoon could well damage your individual or joint credit rating, and make it difficult to live the life you dreamt about when you walked down the aisle.
- Avoid digging a hole from which you can’t escape with credit card debt. Like wandering into quicksand, you sink hopelessly into debt as exorbitant interest rates proliferate and multiply faster than rabbits.
- By keeping your costs down and building a solid credit history, you establish yourself as a couple ready to build savings, develop a positive mutual credit rating, and seize the world rather than be crushed by it.
- When you need to take out your first loan as a couple, you’ll be eligible rather than rejected and denied. With a strong credit rating, minimum debt and growing savings, you’ll be viewed positively by banks and more likely to be approved.
- Weak credit can also affect a couple’s ability to take out a joint credit card. That’s another reason to lower debt or eradicate it. The quicker that bad credit is extinguished, the faster you can embark on establishing positive joint credit and achieving your dreams.
There is no substitute for talking things out. You’re a couple now and everything you do from here on in should be done as two-some, a partnership, and a marriage. Don’t hold back, don’t fudge, don’t mislead and, of course, never lie. Be straight, get everything out in the open, and reach an agreement in principle about how you plan on straightening out any bad debt from the past, cleaning up any credit issues, and establishing a positive joint profile and track record for the future.
Stanley Kubrick once directed a film entitled Eyes Wide Shut, but in this case, eyes wide open is the operative way to behave. Be open with your spouse; learn to talk things out. Collaborate on establishing positive joint credit, fixing any problems of the past, and embarking on a new sterling financial record. This will lead to material happiness and emotional health as well.
Originally written by:
Former Director New Jersey Division of Consumer Affairs; founder of Credit.com and Identity Theft 911