Happy Valentine’s Day to all the lovers out there! If you are one of the lucky ones that has found that right person for you, then you may be looking at joining finances – perhaps moving in together, or taking the plunge and buying a home together. Before you do, read my 10 tips to protect your credit file when you are joining finances. Unfortunately love isn’t enough to ensure our ideas about money are always going to match up. If they don’t – make sure your credit file – your good name stays intact – even if the relationship doesn’t.
By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repair and www.fixmybadcredit.com.au.
1. Take off the rose-coloured glasses.
Yes, cupid may have got you good. This may be the best person you’ve ever known. But that doesn’t mean they are perfect. No, really it doesn’t! 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’. Before you join your finances, take off the rose-coloured glasses for just a minute, and put some real thought into how you are going to make the financial relationship work. With Relationships Australia identifying conflict over money as one of the top causes of arguments and relationship breakdowns in Australia, it makes sense doesn’t it?
2. What’s their history?
People will do what they’ve always done. You need to know of any skeletons in their closet that may impact your relationship and your credit file. Have a frank and open discussion about the financial decisions you’ve both made in your past.
If you are joining finances, perhaps entering a mortgage, or even just moving in together and putting the Electricity and Gas on, effectively what you are doing is joining credit history. You need to know if their credit history up till now is clear.
It might be worth getting a copy of each other’s credit files (you can request a free copy of your credit file and a report will be mailed to you within 10 working days). If there are adverse listings, they will impact your ability to obtain credit together for between 5 and 7 years depending on the listing type. If something on either credit file is amiss or incorrect – it is probably a good time to look at disputing it. Credit listings such as defaults, Judgments, Writs or Clear-Outs can all be removed if it can be proven that the listing was placed unlawfully.
3. What’s their money mindset?
Knowing their credit history should give you a good indication of how your prospective partner views money. So will knowing what debts they currently have. It will give you an indication of how they feel about money, and how much debt they consider normal to handle. You can also talk about paying bills. Do they always pay them on time? If not, why not?
Some of us are great with money and some of us aren’t. If one of each money type get together the potential for both people 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.
One partner can end 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.
4. Do your financial goals match?
Does one of you envision you both quitting your jobs in a couple of years to go travelling while the other has been saving for their own home? Is one’s greatest goal to pay back the 3 credit cards they’ve maxed out, while the other has plans to be debt free by the age of 40? If you establish some differences in what you want out of life, talk about whether there can be a compromise. You must identify how important each goal is and decide whether you really should be entering into a financial relationship at this stage. If your differences financially are too great – perhaps you can work out a way to still be together, but keep your finances (and credit files) separate unless your goals change.
5. Identify needs and wants.
If you decide you want the same things out of life, it might be a good idea to agree on financial priorities, so you don’t blow out all of your good intentions buying things you don’t really need. This could reduce your fights about money and ensure you’re both really on the same page. For instance, if you decide the most important thing is to save for your own home – you can agree that the new car, the expensive dinners and the designer wardrobe are only wants and can be put off until you reach your ultimate goal.
6. Make a joint money plan.
It may be a good idea to make a budget plan for you both to stick to, particularly if you have made a big credit purchase like a mortgage, car or business loan. There are a number of great free websites – ASIC’s Money Smart Website is a good place to start. You can decide who is paying bills, how they are going to be paid on time, where the money is coming from, how you are going to save and what money you will have left over for luxuries. If you don’t end up being the person in charge of paying bills – that doesn’t mean you can bury your head in the sand about your finances. Check the accounts every now and then. If there are any problems or your partner has missed payments – you’ll both want to know about it before your credit file is defaulted.
7. Leave emotion out of it.
During your financial relationship, things can go wrong – arguments can still occur despite your best efforts to prevent them. When it comes to money, agree for your disagreements to remain business-like. That way you can always keep a dialogue about money and there are no heated emotions attached to your discussions.
Likewise, if the relationship should turn sour you are still able to separate love and money. There may be less likelihood of post-relationship revenge purchases impacting your credit file. If you do break up and you have joint credit, notify your Creditors that you are no longer together. Make sure you both get separate statements and endeavour to separate credit files (by dissolving joint credit) as quickly as possible in order to keep control over your own credit history and keep your credit file clear.
If you haven’t been lucky in love, and your partner has left you with a bad credit rating, MyCRA Credit Rating Repair may be able to help. Contact a Credit Repair Advisor on 1300 667 218 for more information and to determine whether you may be suitable for credit repair.
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