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 Reality hit when the 33-year old communications manager started to
think about buying a home with her boyfriend Jason Giannini, and
found that neither of them had pristine credit scores. Indeed, out
of a maximum of 850, both scored in the less-than-stellar low 600s.
So, in an attempt to secure better mortgage rates, they decided to
have a "friendly competition" to see who could lift their credit
scores the highest and the fastest.
Within six months of diligent bill-paying and trimming of debt, they
both boosted their scores to the high 600s, and are now proud owners
of a single-family home in Deer Park, Long Island.
"Nowadays, credit is part of your brand," says Almonte. "It is also
part of your relationship, in terms of the life you want to build
together."
Almonte may not have known it, but according to the Federal Reserve
- yes, the stately U.S. Federal Reserve - things bode well for her
relationship.
The Fed recently looked at the correlation between credit scores and
relationship duration, in a working paper entitled "Credit Scores
and Committed Relationships" by researchers Jane Dokko, Geng Li and
Jessica Hayes (http://1.usa.gov/1PC9Ken). It uncovered some
fascinating tidbits.
MONEY AND RELATIONSHIPS
First: Higher credit scores tended to correlate with being in
committed relationships and staying together. Check one for Alida
Almonte's credit boost. Second: People tend to form unions with
partners with similar credit scores. Check two for Almonte.
What didn't bode as well: Having poor credit, or a credit score that
was wildly different from your partner.
"We find that the couples' average level and the match quality in
credit scores, measured at the time of relationship formation, are
highly predictive of subsequent separations," according to the
authors of the report.
Think it through, and those conclusions makes sense: A low credit
score is a sign that you may be struggling with bills, and financial
stress is never great for household harmony.
Also, having a totally different credit score from your partner
likely indicates that you have contrasting approaches to money, also
a potential indicator of marital strife.
Fear not, lovers: One credit snapshot does not represent your whole
money story.
"We all come from different economic levels, and it is very rare for
two people to come together who spend and save in the exact same
way," says Bari Tessler, a Boulder, Colorodo-based financial
therapist and author of the upcoming book "The Art of Money."
"Credit is just one more thing to be worked through and negotiated."
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SECRETS
In some cases, low credit scores might be clues to negative
behavior, like keeping secrets.
"That could definitely affect marriage and longevity," Tessler says.
In other cases, stinky credit might simply reveal normal life
transitions, like being laid off, raising a new baby or having
temporary trouble covering the mortgage.
"That's just real life," she says.
Now here is the good news: Whatever a couples' respective credit
situation, it is something you can work on together, even if, as the
Federal Reserve data indicates, the odds may be against you.
"I have seen people with lower credit scores be disciplined, make a
commitment, and raise it," Tessler says. "It is hard work, but we
can change our money stories and patterns."
Part of that effort, of course, will be the dreaded Money
Conversation. If you and your partner are wildly mismatched in your
credit, there is no way of getting around it: You are going to have
to sit down, open a bottle of wine, and discuss those differences.
It is never comfortable, but think of it as a pre-emptive strike to
save your relationship, advises financial planner David Haas of Fair
Lawn, New Jersey.
"If they have different money approaches - one person always paying
bills on time, and the other not worrying about it or continuously
spending beyond their budget - then it is important for the couple
to come to terms with this together.
Otherwise, money and credit will be an area of strife which can
break up the relationship, Haas says.
(The writer is a Reuters contributor. The opinions expressed are his
own.)
(Editing by Lauren Young and Bernadette Baum)
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