Do Credit Scores Matter For Dating? – Episode #25

Do credit scores matter when you are dating? Dating is a time for determining compatibility. You can’t check your date’s credit score, but he or she can check it and discuss it. You want to date someone who has similar values about money as you. Well, maybe. If you are good with money, you want someone who is good with money. But, if you are bad with money, you probably still want someone who is good with money. I used to have friends who wouldn’t date someone with credit card debt. They saw it as a character flaw. I think I learned this from Suze Orman: “just cause you are bad with money, doesn’t make you a bad person”. Having worked at myFICO, I learned that someone’s credit score was more important than their debt status. Why? There are lots of reasons for debt, but being late on payments and doing this repeatedly, is quite a different story. It shows another issue around organization and probably lots of psychological issues I’m not trained to go into.

For the record, I had my wife check her credit score on our third date. I know, perhaps I’m a freak…and yes we are still married. But honestly, it was a relief to see that she had a great credit score. Now, she’s bummed when my credit score is higher.

Something like 80% of divorces are related to money issues. You don’t want to make this mistake and the time to get this right is when you are still dating.

Marriage, Divorce and Credit Scores – Lesson #5

Today we are going to talk about Marriage, Divorce and Credit Scores.

As if the credit scoring game isn’t hard enough to track with 3 scores per person, once you get hitched, you now have 6 scores to worry about. Many people think their scores merge when they marry. Not true. There is no such thing as a joint credit score. So face it, you have 6 Scores now. If you haven’t pulled all 6 of your scores do it now.

Your scores can become interdependent depending on how you handle credit.

There are many situations you could be in but all the scenarios take too much time, so we will go right to our recommendation. each of you should have your own personal cards and also establish some joint cards. These don’t have to be new cards; you can take one of your current cards and make it joint. Why do we like this setup? It means you have your own credit but share credit as well.

Financial experts will then tell you that you should try to use your personal cards for personal use and your joint cards for joint-community purchases.

If you came into the marriage with no credit cards, this is a great opportunity to establish credit of your own. Get your own cards, and establish a bank account. These are good things to do while you are married, as you can get an “assist” from your spouse’s credit.

Remember we discussed earlier how credit scores are looked at when getting a home loan and that often they take the mid score. So what do they do now when you are married? Answer: They often compare your mid score to your spouses and take the lowest one. Car companies usually pull one for each of you but they may take a similar approach if you both plan to sign for the car. They will likely go with the lower score, because it gets them a higher interest rate. Did you know that some car companies make most of their profit from financing?

Another option: if you have a higher score than your spouse and you can qualify for a better rate based on your income, with just your score, then just put your name on the loan application but put both names on the title. This way you get “community property” AND you get the best loan rate.

Divorce is hard. No way around this. We constantly hear stories of people whose credit was wrecked in divorce. So everyone wants to know what should you do with your credit when you get divorced?

When you divorce, you must contact each credit grantor and either close all joint accounts or convert them to individual accounts. Personally, I like converting accounts so you hang on to your credit limits. Let’s go back to our example with Jack and Jill, in this case Jack converts the Visa and Jill converts the Amex to an individual acct.

If you have trust issues, you should consider closing down the joint accounts completely. This way, what you end up with should like what you came to the marriage with, only cards that just have 1 name on them.

Why be so careful? Well finances usually get harder after a divorce.

According to the US Census Bureau, only 37 percent of custodial mothers receive the full child support payments they are due. Only 15 percent of all divorced women are awarded alimony, and more than one out of four never receive any of the awarded alimony payments.

Countless studies show that money is the biggest cause of marital stress and divorce, so follow our advice and check all 6 of your scores first, and setup your cards to lead to success. If you are going to monitor your score with a product like Score Watch, you should monitor it for both spouses.

Join us in the next lesson, which discusses Higher Credit Scores.

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