One of the best pieces of advice given to newlyweds that I’ve ever heard was: Never fight about money.
It’s such a simple thing, and yet so many of us are unable to do it. To be fair, money and credit problems are often cited as some of the most stressful things we deal with in life.
So how can we heed that very sound advice and never fight about money?
The best way is to come up with a set of rules that you each follow, which will allow you to develop good money and credit habits.
Often the problems that develop and eventually escalate are related to bad habits or ignorance about the rules of credit.
Here are some credit tips for newlyweds (and the rest of us, too) that can help ensure a blissful financial life together.
1. Start talking about money soon into the relationship.
Most of the problems that arise having to do with credit are because one of you is surprised by something.
Don’t make assumptions about what each other owes or about how you handle debt and finances.
Try to get everything out in the open at the beginning so if there is an issue, you can tackle it as a team.
2. Know your score.
This is an important part of starting out with an open dialogue.
Both of you should take advantage of the free credit report that is available from each of the credit rating agencies once a year.
Review it yourself for any errors or inconsistencies, and then share it with your partner.
“Knowing where each of you
stands will give you a head start.”
3. Don’t cancel existing cards.
There’s a temptation for newly married couples to want to combine their finances and start fresh. This can be a big mistake if it’s not done carefully.
The credit score you’ve established is based on things like the length of time you’ve had credit with the same issuer. Cancelling a card can wipe out that hard-earned credit history.
Instead, think about adding each other to your existing cards and credit lines. That’s assuming you each have good credit, of course.
4. Don’t rush out to apply for new cards all at once.
Each new line of credit you apply for usually generates a credit inquiry. These inquiries – especially if there are multiple – can damage your credit almost immediately.
Instead, apply for a single card if you want, as a household expense or emergency card. This can even be a store card, as they are less likely to impact your score negatively.
5. Don’t use credit to make those big purchases.
This can include things like furniture and other household items. Use caution when doing this as well.
If you run up the amount you owe, you risk tipping your debt-to-credit ratio into a negative zone. The rating agencies use this metric as part of your credit score, and it can cause your score to fall.
If possible, spread out your purchases over time. Allow your debt to increase gradually. Better yet, pay cash whenever you can.
By following these tips, newlyweds have an opportunity to start out on the right financial foot.
Using credit wisely and knowing where each of you stands with regard to your credit and financial situation will give you a head start and make it easier for you to follow that great piece of advice…never fight about money!
Photo source: elephant.com.