Why your credit score is the third wheel in your relationship

Why your credit score is the third wheel in your relationship

  • Would you find someone less attractive if you knew they knew they had substantial credit card debt or were poor with their money? 
  • Financial stress is often cited as one of the main reasons for the breakdown of relationships. So how soon into dating someone should you bring up money? 
  • If you are looking to move in together, buy a house, or use credit to make a large purchase, then whether you like it or not, your partner's credit score will affect you. So do you have a right to know it? 

Wedding vows might mention “for richer, for poorer”, but financial stress remains the primary cause of relationship breakdowns. So, if we take it back to when we are first finding a partner, are we attracted to someone who is smart with their money? Does it matter? We explore these questions and how to handle financial challenges in your relationship.

Most of us have a general idea in our head of what we envisage in a future partner. Some of us may even write down a list of the qualities that they find attractive. Things like having a sense of humour, and being adventurous, honest and respectful, all come to mind. But what about money? Does someone who handles their money well get us all hot under the collar?

Let’s take a step back and look at the facts

Baby steps

A 2017 survey by Relationships Australia found that among the 1200 respondents, financial stress was the most common reason cited for the breakdown of a relationship, with more than one in four breakups being blamed on money issues. 

Going back to the height of the Global Financial Crisis, when the survey was also conducted, the same study found that financial stress was even more of a challenge, contributing to one in three relationship breakups.

And we aren’t alone. This isn’t an issue for just us Aussies.

A poll by Slater and Gordon over in Britain showed that money worries were at the top of the list of why married couples split up, with one in five of the 2000 respondents saying it was the most common cause of marriage issues.

In the USA, Ramsey Solutions survey results showed that money fights are the second leading cause of divorce, following infidelity.

So, while it’s not particularly romantic, it is realistic to check whether your future spouse is smart with their money.

42.93% of single females and 40.52% of single males said yes, they would find someone less attractive if they had debt
- Credit Card Compare survey data, January 2019

Is being smart with money attractive?

Worth it

We conducted our own survey, which asked if you would find someone less attractive if you knew they had substantial credit card debt.

42.93% of single females and 40.52% of single males said yes, they would find someone less attractive because of this. Only 37.50% of females and 34.48% of males said it wouldn’t change attractiveness.

For those people in the survey who were married or partnered, we asked if it would stress them out if their partner got themselves into credit card debt during their relationship. More than 50% of females and 40% of males said that it would, with close to 30% for females and just over 30% for males saying it would depend on how they got into the debt in the first place.

For example, if your loved one had to pay for unforeseen medical expenses this would be seen differently than if someone racked up credit card debt due to an uncontrolled shopping habit.

And if we turn our attention overseas, Perfect Partners, a matchmaking service in Canada, asked if income was important. Over 95% of women said yes, and over 90% of men didn’t care.

A survey of online daters from Discover and Match Media Group showed that having a good credit score is considered ‘sexy’ and was ranked as important by 69% of respondents, ahead of a sense of humour, ambition, courage and modesty.

Being smart with your money shows signs of maturity

Personal finance female perspective
Kate ended a relationship because of how careless her partner was with money

To dig deeper into this we spoke to Kate  (name & image changed for privacy reasons) a 30-year-old Sydney-based sales professional. In the past she has ended a relationship because of the way her partner behaved with money.

“My ex never made responsible decisions about money and this was a key factor to us breaking up. I was in my early twenties and was financially self-sufficient, but he was nearly thirty and in a lot of debt. Not over anything significant though, like a car or property. It was all consumer debt. And he just kept accumulating more and more.

He was always asking his mum, and even friends or me, for money. It wasn't so much the fact he was bad with money that was the issue. It just showed me he lacked a lot of maturity and that wasn't something I wanted in a partner.”

When we talk about women wanting to find someone who managed their money well, it's rarely the case that they are looking for a multi-millionaire to look after them. Instead, they are just looking for someone who can offer stability and trust.

He was always asking me, his mum, and even friends for money. It was a major turn-off.
- Kate, 30, Sydney, Sales Professional

Finding a partner who shares your goals

Is debt attractive
Jason worries his debt is not 'sexy'

While Jason (name & image also altered for privacy) is in his late twenties and worries that the debt he has isn’t sexy. But he is doing everything he can to cut down his debt and now lives on a strict budget. 

He is hoping to find a partner who is just as motivated and shares the same goals.

“I make an average wage but made some silly decisions in the past. But I hope to be debt-free in about a year and a half. I’m looking for a partner who is quite responsible with money. Given the changes I’ve been making there is something quite attractive about a woman who is in control of her financial domain”.

How and when to talk about money in your relationship

date

While it’s unlikely that you’ll chat about the specifics of your income and money goals over candlelight on the first date, there will come a time in a relationship when money inevitably needs to be brought up.

But a discussion about money should be something that is considered a normal part of every relationship. Because for most of us, money is never about just money. It’s a tool we use to accomplish our life goals. And most of these life goals we want to share with our partner.

With all of us having different attitudes to money, this can be a major cause of arguments and friction in a relationship. If you are a saver and your other half is a lavish spender, then there are likely to be some issues that arise from this.

There are no hard and fast rules here on when a conversation around finance should occur. But for a lot of people, before you move in together or prior to making a joint purchase is probably the latest you should leave this chat.

That’s because the quickest way to get into arguments over finances is when you discover you are not on the same page as your partner. But you are in a partnership, so the key is to work out a way to discuss finances in a productive way. Being open and honest is one of the crucial steps to overcoming financial stress.

What to consider when having a money conversation with your partner

youmadepartner

Firstly, work out the life goals that you want to achieve. Does that involve buying a house, taking time off for children or travelling? If your goals and your partner’s are widely different there is a potential for this to cause conflict. It's always good to have some mutual financial goals to plan together that are important to you both.

Then you need to decide if you will manage your finances jointly or separately. While there is no ‘one size fits all’ approach to this, what you want to ensure here is that regardless of the choice you make, both of you understand your finances. 

Some couples can have one partner manage all of the finances in an effort to avoid conflict. But what you should ensure is that you are both equal decision makers, even if the logistics do fall to one person in particular.

You also need to work together to understand each other’s spending habits and feelings towards large amounts of debt. Does your partner currently have a large amount of debt? Do they have a plan for paying this off? 

This isn’t to say having differing views here means the end of your relationship. It just means that you’ll have to work hard to ensure the lines of communication remain open so that resentment doesn’t build up on either side. 

Being open and honest is one of the crucial steps to overcoming financial stress.

What red flags should you watch out for?

redflag

If you discover that your loved one is trying to hide debt from you, or is lying about their financial situation, it can be a red flag – not just from the financial side of things, but because lying destroys the trust which is a foundation for any strong relationship.

If your partner has filed for bankruptcy in the past, this can be another sign that they may not have learned ways to solve their money problems without resorting to this kind of extreme measure.

Why you might need to know your partner's credit score

credit score best thing about me

At some point in your relationship, you're going to need to care about your partner's credit score. Which for some of us can be a stretch as we don't even know our own credit scores.

Your credit score is a number between 1 and 1000 that indicates your creditworthiness. The higher your score, the less of a risk you are perceived to be in the eyes of a lender.

If you are looking to move in together and rent, buy a house with a partner or use credit to make a large purchase, then whether you like it or not, your partner's credit score will affect you.

If you or your partner have a low credit score then this could mean you:

  • can’t take out a joint tenancy on a property
  • might not be able to put both names on utility bills, leaving you solely responsible
  • could be refused a personal loan or a mortgage
  • are deemed a high-risk borrower so may only be able to access loans at higher interest rates. 
To discover your credit score you can use our free credit score tool. Once you have an idea of where you and your partner are both at, you can work out a way to move forward together.

Money fights are the second leading cause of divorce, following infidelity in the USA.
- Ramsey Solutions

Working together to improve your credit scores

couple goals-team

We’ve covered before in detail how you can increase your credit score.

But here’s a summary of what you and your partner could do to improve your credit score for the best chance of getting a loan approved.

  • Always pay your bills on time
  • Check your credit report to ensure there are no errors on it
  • Pay off outstanding debts
  • Pay off your credit balance each month
  • Don’t make too many credit applications at the same time 
  • Do your own research before you apply for any line of credit

Overall, while some people do find someone who manages their money attractive, what it seems is more important is ensuring you can have open and honest conversations around your finances.

To sum it up, you need to feel like you are on the same team and working towards the same goals.