Help Your Significant Other Rebuild Their Credit — While Keeping Yours Intact
Money is one of the top issues that can cause friction in a relationship: Conflicts over spending, saving, and goal-setting can be major stumbling blocks to a happy, healthy romance. And things can get even hairier when your credit scores are wildly different: When one partner has bad credit (or no credit at all), it can be harder to achieve your shared financial goals, like buying a house. What’s more, differences in credit scores can often be a sign of underlying differences in how you spend and save money, and how you use credit.
This doesn’t mean that you should run the other way if you find out that your otherwise amazing significant other has lousy credit. But it does mean that you should take steps to address it, before it becomes an issue. By working together, you can help your partner improve his or her credit — without hurting yours in the process.
Don’t judge. Now is not the time to make your partner feel bad about his or her lackluster credit score. Dealing with debt and bad credit isn’t easy. Do your best to reserve judgment about past financial mistakes and be a positive source of support.
Don’t bail him or her out. Even if you have the financial means, avoid the temptation to simply pay your partner’s outstanding debts. It’s a quick-fix option that doesn’t address the real underlying problem. Until your partner gets a handle on how to use credit responsibly, he or she is likely to wind up in the same situation a few months down the road.
Check your credit together. Sure, it’s not dinner and a movie, but spending a night in with your credit reports can bring you closer as a couple – and help your significant other get a handle on his or her credit. Everyone is entitled to a free credit report every year from annualcreditreport.com, so take advantage of it. Pull your reports and spend a few hours going over them, keeping an eye out for anything fishy. A couple of things to keep in mind: First, if your significant other has shaky credit, he or she may not know what to look for when reviewing a credit report. Second, make sure that your partner knows the difference between the legit, government-sponsored free credit report and similar-sounding sites that charge you a fee and sign you up for a credit-monitoring service — it’s often hard to distinguish the real deal from lookalike impostors.
Create a budget together. Sit down together and review your partner’s finances — his or her income, monthly bills, credit card payments, and so on — and come up with a budget that makes sense. And make sure you choose a system that your partner will actually use: You know your partner best, so you know if he or she will respond best to a high-tech budgeting app or an old-school pen-and-paper setup.
Think of ways to knock out debt. Two heads are better than one: Help your partner think of things they can do to take bigger bites out of their debt every month. Can your partner use their talents to start a side hustle? Do they have any unnecessary items they can put on eBay or sell at a garage sale? Are there any subscriptions, memberships, or monthly bills they can cut to free up more money each month?
Help them research and apply for a secured card. A secured card can be a helpful tool for anyone trying to repair (or establish) credit. Secured cards are similar to credit cards, but they have low limits and require a cash deposit (typically a few hundred dollars). Most can be upgraded to normal credit cards after a certain amount of time — provided, of course, that your partner uses their secured card responsibly.
Make them an authorized user on your credit card. You can easily add your significant other to your own credit card as an “authorized user.” As an authorized user, your partner will typically receive their own card, linked to your account and credit limit. Two words of caution on this: First, if your partner tends to spend freely, you might want to think twice about giving him or her access to your account (but no worries — you can make someone an authorized user without actually giving them their own card. This is a lower-risk option if you think your significant other might give in to temptation). Second, not ALL credit card companies report authorized user activity to the credit bureaus, so it’s a good idea to double-check and make sure it’s worth the effort.
Don’t co-sign anything. Again, it’s tempting to simply sign off on a loan, credit card, or other item. But don’t. If your partner defaults on the loan or gets behind on their credit card payments, guess who’s on the hook? You shouldn’t do anything that will jeopardize your good credit.
Bad credit doesn’t have to be a relationship deal-breaker: With a little support and patience — and a lot of hard work — you can help your partner get on the road to better credit and more stable finances. An added bonus: as you work together toward this financial goal, you’ll also be building valuable relationship skills like communication and honesty. If you need more advice than the options and information listed above, you can always reach out to the team at American Credit Foundation.