You would be a very fortunate couple if you could live out your lives together without ever having to resort to borrowing at some stage. Most of us need to borrow money from a finance company or bank to buy a bigger and more suitable family car and nearly all of us need to borrow to buy a house of our own. In between there are numerous other occasions when borrowing is the most convenient way of going about your life. It is alright to borrow as long as paying back the loan is well within your means. It is a fact that people who have never borrowed have as much difficulty in getting a loan as those who have a bad credit history. This is because one of the main tests on whether you are to be classified as a good repayment risk or not will depend on your past credit history.
Always Keep a Good Credit History
If we could be as upfront with our chosen partner regarding his or her credit history, as is a financier to whom we have gone asking for a loan, there would be far fewer arguments taking place over financial matters after the marital knot has been well and truly tied. Money matters are behind many marriage breakups and a lot of this could have been avoided if only the two starry eyed romanticists had discussed their attitudes towards finance beforehand.
One partner’s sloppy attitude towards credit can soon bring down the other to the same level, despite him or her having been a meticulous payer beforehand. It is when this happens that relationships start becoming strained. Here are five ways to avoid financial arguments ruining your relationship:
- Avoid high debt situations. If you have experienced family or friends struggling to live because of the financial bind they have got themselves in you may be very cautious about getting yourself in the same position. However if your partner has never seen such hardship he or she might feel you are being too inflexible about taking on debt. It is therefore a good idea to discuss your feeling on this subject before you marry. Make it a point to discuss each other’s financial position and if one of you is carrying too much debt, work on ways of reducing it together. Once you are married your partner’s low credit rating will bring yours down to the same level. It is best for both of you to start off without such a worry.
- No credit history. It could be that neither of you has had to borrow while single and that neither of you have a credit history. Banks and finance companies have trouble handling these situations because they place much of their ability on whether to loan you the money to help you buy your house on both of you having a good credit history. It could even be in your interests to purchase a joint credit card between you and make sure you pay it off on time every month. In this way you will be building a credit history that will help you in the future.
- Slack bill paying. No matter what the bill is for, or who the money is owed to, make certain you pay all your accounts promptly. You might feel that your power bill can get paid later because the next bill is not due for another three months, if you do, don’t be tempted. Pay the bill as soon as you get it as any late payment reflects badly on your credit history. Once you are married any late payment reflects badly on both of you. If your partner is slow in this regard, sit down with him or her and go over everything together each month, if you still can’t get him or her to cooperate suggest you take over all the bill payments. Conversely, if it is you who is the slack one, maybe it would be best if you agreed for your partner to take over this responsibility for both of you on these matters. Whatever you both decide, make sure you discuss your finances regularly so both of you know where you stand financially at all times.
- Regularly check credit reports. Credit checks are readily available and it is the interests of both partners to know where each of you stand in this area at all times. Mistakes can be made in this record keeping and one such mistake could prevent you from obtaining finance when you need it most. Entries on your credit report can be challenged but it does take some time to get things right again. It is too late once you have been refused credit and have blown each other apart with blame, only to find the credit reporting company was at fault.
- Don’t live on credit. It is bad practice for either of you to overuse your credit card. If you have a $5,000 limit on your card try to avoid spending any more than $1,000 of the credit that is available. No matter what your credit limit it is actually not recommended that you spend more than 20 percent of it. Pay off your balance religiously every month. Where possible use your debit card as that won’t be attracting interest. Using your credit cards up to their limit will be what will affect your credit rating the most.
It is one thing to find out your partner has a poor credit rating, it is another to find out that you are regarded as a bad risk as well. Keep your credit ratings high and you will find disagreements on money matters will start diminishing until they disappear altogether from your relationship. If you can both be confident in approaching a bank for a home loan, when the time arrives for you to do so, you will both feel you have achieved a lot together and your financial troubles will be behind you.
Kristy is a money saving mom and freelance personal finance writer who has been married for over 10 years. Kristy now writes for Life Insurance Finder where she helps people to compare and save on a range of income protection insurance policies.