MoneyTalk for Couples: What is your credit score?

Stacey Black BECU Lead Financial Educator

When it comes to any relationship, aligning on money matters is important as it plays a pivotal role in every aspect of a couple’s life.

Although talking about finances may not be the most fun conversation to have, there’s no doubt it’s an important one that can have long-term impact.

To make defining your relationship with money easier as a couple, BECU Lead Financial Educator Stacey Black suggests that you continue the conversation with this question:

What is your credit score? 

Another important part of your financial future includes awareness of each other’s credit situations. 

Do you or your significant other have bad credit? Are they carrying large sums of debt, or have they defaulted on loans? 

A poor credit history could drastically hinder your ability to plan ahead and achieve your goals, so conducting this type of “financial background check” ahead of time is crucial.

Credit reports contain information about your credit activity and current credit situation such as loan paying history and the status of your credit accounts, but it also contains other information that is important for you to review together. 

This includes:

• Identifying information: periodically, it’s important to review to make sure your name and address are correct. If not, it could be an indication of fraud.
• Account history: this is the biggest section on your credit report and has information about each of your credit accounts, including how you’ve paid
• Public records: this section includes negative financial information like bankruptcies, lawsuit judgements and tax liens
• Credit inquiries: this section lists everyone who’s accessed your credit report in the past two years

For those without credit, a secured credit card provides the opportunity to start building credit responsibly. A secured card requires you to make a security deposit, which is used as collateral in case of default on the loan and can help people feel more invested to make payments.

Of course, there are pros and cons of cosigning a loan or credit card for your significant other:

• Pros: helping someone build good credit by cosigning a loan, for example, can change that person’s life for the better and have positive impacts on your relationship
• Cons: 
• As a cosigner, it’s your good credit that’s backing the loan. If your significant other misses a payment, that late payment history goes on your credit report.
• When applying for credit cards or loans, credit card issuers and financial institutions look at what’s called your debt-to-income ratio to determine approval and the credit limit or loan amount for which you qualify. If you’re a cosigner on a large loan, that’s going to raise your debt-to-income ratio, causing some creditors to back away because they think you have too much debt.

The Shoreline BECU branch is located at Gateway Plaza at N 185th and Aurora.

Previous MoneyTalk columns here