Managing Ill-Fated Courtships With Credit Report Consultations

Some 56 percent of Americans carry $15,000 or more in credit card debt with only 4 percent claiming they are debt-free, according to a National Foundation for Credit Counseling (NFCC) poll.

“There are a number of good reasons to have access to a credit card and just as many reasons for keeping balances under control,” said Bruce McClary, vice president of communications for the NFCC.

Because the financial stakes double when it comes to dating and eventually marriage, a full financial picture of the bride or groom before marriage can help avoid financial surprises down the road, according to Rod Griffin, director of consumer education with Experian, a credit reporting agency.

And financial advisors can act as something of a matchmaker in these circumstances – or maybe a match-measurer.

The average household with any kind of debt owes $134,643, which includes mortgages, according to NerdWallet’s annual survey of household debt.

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“It’s important to ensure your credit report and score are on track so you and your partner can accomplish any shared financial goals,” said Griffin.

At engagement and before marriage is where financial advisors can intervene more easily and prevent a financial disaster.

“The cost of a divorce in the U.S. is several thousand dollars at best,” said Ann-Margaret Carrozza, attorney and author of the book Love & Money. “This leaves the parties in an even worse financial position after the split.”

Although a financial advisor can only pull the credit report of a client and not the credit report of their potential spouse, they can play an active role by counseling the couple in advance that’s potentially heading down the aisle.

“These conversations should consist of more than just annual income and include topics like spending habits, debts, credit scores and financial goals,” Griffin said. “The discussion should touch on how combined finances will be handled once married.”

One way to access the credit report of a client’s potential partner is to suggest a joint review in a pre-arranged consultation since credit scores are used in almost every lending decision, such as home loans and car loans.

“A score below 579 is considered poor and having a poor score can often make it difficult to be approved for credit,” Griffin said. “A poor credit score may not be a relationship deal breaker, but it can be a sign of someone who needs to better manage their finances. Improving starts with educating yourself about what factors impact your score, and then working to improve your financial habits accordingly.”

Red flags on a credit report include accounts in collections and delinquent accounts because they can lower a credit score.

“Late payments can also be detrimental to a credit score,” Griffin said. “Payment history makes up 35 percent of your FICO Score 8.”

Juliette Fairley is a business and finance journalist who has written four personal finance books and has written for major news organizations. Juliette can be reached at juliette.fairley@innfeedback.com.

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