Smart couples air credit laundry

Experts suggest people talk with their partners about financial habits long before they consider applying for a loan together.
Zillow
Jul 8, 2013

By S.E. Slack

Do you trust your partner? You’ll have to if you ever want to combine finances to buy a vehicle or a home. Not everyone manages credit in the same way, which can make for some tense times in any household where the finances of both parties are necessary to make a major purchase.

Credit scoring firm Experian says it’s a good idea to air your credit laundry and talk with your partner about financial habits long before you begin considering applying for a loan together. You will always have your own individual credit history, but your individual financial behaviors also affect your partner.

Reviewing your credit reports, savings, investments, debts, credit accounts, salaries and similar financial records together can help prevent any unexpected issues when you merge your finances. That makes it easier to set financial goals or plan for major purchases. Ask lots of questions and be sure to tell the whole truth when talking to one another about financial issues.

Ask your partner, for instance, whether they are a saver or a spender? Do they pay your credit charges in full or revolve? What do they consider necessities and luxuries? Will you manage your finances together or will one person be in charge of paying the bills? Will you maintain separate checking accounts and, if so, what expenses will be paid from each?

It’s important to reach common ground on topics like these, says Experian, because lenders will consider both of your credit histories when you make major purchases. On all joint accounts, you are each equally responsible for the debt incurred and a missed payment will impact both of your credit reports. And, in joint property states, you can be liable for debt even if your name is not on the account.

At some point, couples need to decide whether or not to merge all your financial accounts. Many couples do this because consolidated accounts often make for easier record-keeping. Others, though, prefer to keep things separate – not as a sign of distrust but as a credit-smart move designed to keep the relationship healthy.

Experian says it’s not a bad idea to consider keeping at least one of your individual accounts open. Keeping an account in your name will help ensure easy access to credit in case of an emergency, plus, in the unfortunate event of a split, an established account in your name will help you rebuild your individual credit history.