Happy Valentine’s Day for tommorow, 14th February everyone…hoping cupid’s bow meets its target this Valentine’s Day and sends you someone special. If it does – and you are about to take the commitment road, here’s some important points you need to know about joint debt to prevent a bad credit score.

By Graham Doessel Founder and CEO of MyCRA Credit Repairs and www.fixmybadcredit.com.au.

Being in love and in particular new love can be the best feeling in the world. But let’s be honest, it’s not the most practical of states to be in. Sometimes our standards go out the window and we lose ourselves in the process of adding to our ‘relationship’ and creating an ‘us’. In this process it is important to remind ourselves of the important things about ourselves that should not change no matter who we’re with. Now going deep into that is probably another blog altogether. But let’s just concentrate on our finances and how we can maintain our good name and our clear credit file when we take our relationship to the next level of commitment with joint debt.

Some of us are great with money and some of us aren’t. If one of each type get together – the potential for both to be financially damaged is greatly increased.

As credit rating repairers, every day we meet people who need help with fixing credit rating issues due to no fault of their own really, but they have fallen under the financial shortcomings of a partner.

When we take out any credit together, such as loans, utility accounts, homes and rental properties, we become very reliant on our partner to keep up their end of the credit repayments. Very often one partner ends up with a bad credit score, simply because the other person on the account has not made repayments to the account. Often people are unaware their partner is generating defaults on their credit rating until it is too late. They apply for credit in their own right and are unable to proceed due to debts and bad credit their partner has initiated. The relationship may even have ended years ago. A bad credit score due to a default lasts for 5 years, a ‘clearout’ listing is 7 years.

So many times we hear clients say “I’m not sure how this happened – how can my clear credit file be damaged by something my partner did?” Unfortunately when couples go into joint debt, both credit files are at risk if repayments aren’t made.

So how do people protect themselves, their assets and their good credit rating, BEFORE they marry or move in together and create joint debt?

Many people come unstuck by not asking the tough financial questions about their prospective partners early in the relationship:

1. Ask about your new partner’s financial past. People will do what they have always done. If they have financial skeletons in the closet we should be wary about leaving our credit rating at risk.

2. 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?

3. 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?

4. 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?

5. 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.

If some of the answers to these 5 questions don’t leave you running out the door, but leave you wondering whether you are on different planets when it comes to money, it could mean you need to keep your finances separate for a significant period of time. For instance, just because you have bought a home together doesn’t mean you can’t keep other bank accounts, credit card and previous homes you own in your name only.

It might also be a good idea to be the one responsible for all joint debt accounts, and to check those statements regularly for any issues.

It is also important long term to order a copy of your credit file regularly. This will notify you of any problems before you apply for credit in the future.

Just remember that as high as emotions can run, they can also get just as low. 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. Then you can relax and enjoy the buzz of falling in love.

For help with fixing credit rating or listing errors, contact MyCRA Credit Repairs on 1300 667 218 or visit our website www.mycra.com.au.