Being ‘in love’ is one of the best feelings in the world, but not one of the most practical states to be in. Sometimes personal financial values go out the window and people lose themselves in the process of adding to the ‘relationship’ and creation of ‘us’. But at some point the boring old finance stuff becomes vitally important. We look at what you need to do to prevent STD impacting your credit file.
By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repair and www.fixmybadcredit.com.au.
Many people run into trouble by not asking the tough financial questions about their prospective partners early in the relationship. Your financial generosity now could become the very thing that is used against you if the relationship sours. Before you enter into any financial transaction, consider carefully how secure you would be if things did take a turn for the worse.
What’s your money personality?
Are you a spender, a risk taker, a saver or a security seeker? There are many different types of money personalities – and you could be combination of both. If you and your partner are different money personalities, this may be the cause of arguments.
When two different money ‘personalities’ combine, it may be all rosy to begin with, but at some point you are going to disagree about money. Fights can begin and the potential for both of you to be financially damaged is greatly increased.
According to Relationships Australia, conflict over money is one of the top causes of arguments and relationship breakdowns in Australia.
When there’s joint finances involved in the split, sometimes you can continue to fall under the financial shortcomings of a partner well after the relationship is over.
When people take out any credit together, such as loans, utility accounts, homes and rental properties, they become very reliant on the partner to keep up their end of the credit repayments.
Who is liable for debt?
Sometimes one partner ends up with a bad credit score, simply because the other person on the account has not kept up with repayments. People can be unaware their partner (or ex-partner) is generating defaults on their credit rating until it is too late.
The most common type of negative listing is a default, and is placed by the creditor when an account holder fails to make payments past 60 days.
In many instances it’s not until people apply for credit in their own right that they find out they have a default against their name. The relationship may even have ended years ago and the partner is still paying for it.
Bad credit history can last for 5-7 years, depending on the listing type.
Many people come unstuck by not asking the tough financial questions about their prospective partners early in the relationship.
How to Prevent Relationship Debt
1. Consider taking a Money Personality test, such as the one at www.TheMoneyCouple.com
2. Ask about your new partner’s financial past. People will do what they have always done. If they have financial skeletons in the closet it is possible they will continue this behaviour in the future.
3. Ask what debts they currently have. This will give you an indication of how they feel about money, and how much debt they consider normal to handle. Does this match with yours?
4. Talk about paying bills. Do they always pay them on time? If not, why not? This will give you a good indication of how this person regards money and credit repayments. Ring any alarm bells yet?
5. Ask what their financial goals are for the future. Do they match yours? If your new partner wants to blow all of their money on an overseas trip, but you want to save for a home – how will this work long term?
6. Verify their answers about existing and past debt. Ask them if you can see a copy of their credit file (and versa of course). A copy of your credit report is free every year from one or more of the credit reporting agencies in Australia. It will be sent within 10 working days. You can order your credit report here http://www.mycra.com.au/credit-file-request/.
If you are unsure of your new partner’s financial compatibility, it could mean finances need to be fairly separate for a significant period of time.
But the most important aspect to the meeting of financial minds is to keep an open dialogue about money. Talking freely and honestly, preferably keeping the emotion out of your discussions may help to avoid surprise bad credit from your partner.
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