Valentine’s Day is almost upon us and as you prep for your date with chocolates, flowers and a fancy restaurant, a suitable credit score may never have occurred as a criteria in matters of the heart. You probably don’t want to pop the question ‘how’s your credit score looking?’ but if your date is hiding a financial skeleton in their cupboard, you might want to know since it could affect you if things do get serious later down the line.
When things start to get serious
At Noddle we think it’s a good idea that everyone tries to have an open and honest conversation about finances with their partner when things begin to get serious to ensure there aren’t any nasty shocks later.
We recently conducted some research* and found that 25% of people in relationships admitted that they didn’t have a conversation about finances before they moved in together. Couple this with a report released by the Office for National Statistics last year which showed that money worries were more likely to put strain on a relationship than long working hours or an extra-marital affair and you can see why this conversation is an important one to have.
When things get a lot more serious
So you think you may have found ‘the one’ and your mind is now wandering to thoughts of the next steps such as moving in together.
Your partner’s credit rating will only begin to affect you when your finances are combined.
Simply moving in with your partner won’t affect your finances but it’s a different story if you are considering taking out a joint account such as a bank account or mortgage.
Merging finances is a big step and if your other half has a poor track record you may be less likely to be approved for credit or be charged a higher interest rate if you are accepted. So before you secure a meeting with the lenders you’ll want to check your credit score. It gives an overall reflection of how well you manage your finances and, lenders will want to be confident that you are capable of paying back any money lent to you.
Important – if you find out your partner has a poor credit score, don’t automatically assume it’s due to bad money management. Having little or no evidence of past credit history is one of the main reasons for a poor credit score.
It is important to remember a joint loan means joint liability so if one of you is unable to pay the debt
the other will be equally responsible in paying it off.
To learn more on how you or your partner can build a solid credit report and score, read our tips here.
What if it didn’t work out?
The breakdown of a relationship can be overwhelming but the financial impact left behind can cost you more than just heartbreak. A divorce won’t directly affect your score, it’s the joint accounts including your mortgage, co-signed loans and joint credit cards that you need to be careful of. If there is any negative activity such as missed or late payments it can potentially damage both of your credit scores, an unpleasant surprise you certainly don’t want to deal with when applying for any future credit applications.
To remove any financial links you will need to financially disassociate yourself from your ex-partner but before doing so it’s best to ensure all balances are paid off and in full. You can do this on your Noddle credit report by raising a dispute against the relevant information.
Keep the romance alive this Valentine’s Day and ensure you’re on the same page when it comes to finances and your credit score.
*Brits in the dark about their finances – http://www.blog.noddle.co.uk/brits-in-the-dark-about-their-partners-debts/