Finding your perfect match these days is hard enough, but now there’s something more you need to find out about your dating partner besides just their hobbies, life experiences, and dreams: their credit. Sure, talking about something as mundane as finances can hardly be called romantic, yet in relationships that are getting serious enough, it’s a must have conversation. So what do you do when you find yourself in a relationship with someone that is a credit disaster? Or if the tables are turned and your partner’s credit puts yours to shame? The good news is the relationship doesn’t have to end because of some credit issues. Though finances are one of the top reasons people choose to divorce, if you follow these five steps, it’s likely that bad credit or loans won’t come between you and your significant other: Having “The Talk” You don’t need to talk about credit or finances on the first date, or even the first several dates for that matter. But if this relationship is something you plan on keeping for a while, there are some signs that you need to sit down and lay all the cards (credit cards that is) out on the table. If you’re thinking of buying a property together, opening a joint bank account, getting married, or making any other financial decisions that will link the two of you together for years or decades to come, you need to talk about your financial status—including any and all debts, bankruptcies, foreclosures, and whatever else you may not want to talk about. Now is not the time to try to paint the picture brighter than it is—it’s time to be brutally honest about where each of you stand and what that means for your financial future as a couple. Be HonestSure, it can be embarrassing to admit you’re $10,000 in debt and you’re not sure what you spent the money on, or that you went through a tough patch a few years back that dinged your credit score up beyond belief, but being truthful now will set the tone of how you’ll handle your money together as a couple. Make a PlanOnce each of you has divulged what there is to know about each other’s credit and financial history, it’s time to figure out the plan of attack. You’ll want to know:
When you’ve put together a realistic budget that works for you, make sure you’re giving a large sum of your income (as much as you can) toward your common debt. What’s common debt? Well, if you’re married, it’s the debt you hold as a married couple, even if you weren’t the individual who accrued that debt. Not married? What you call common debt is up to you and whether you’re willing to pay off someone else’s debts. As you start paying down debts, your credit scores will rise, which is great news for both of you and will bode well for anything you plan doing jointly in the future. Attack ItStick to your budget. Pay your debts. Limit spending. It’s not easy and may take a few years, but the end result will be worth it both for your bank account and your relationship. It’s vital to discuss with your partner how aggressively you want to attack your debt and fix your credit issues. Some couples choose to go bare-bones for a few years and really scrimp and save to put every penny they can toward their payments. Others may choose a more level approach, giving themselves some room for spending, while also contributing a significant amount toward their balance. Set GoalsAnother great tip for getting through the “attack it” phase is goal setting. What things would you as a couple like to accomplish in your life together? Think of things like buying a home, taking a vacation, starting a family, moving, opening an investment account, starting a business, or simply enjoying life debt-free. Having goals will help keep you on track and give you something to work for. Future Finances Congratulations, you’ve paid off all your debt. How does that feel? No more car payments. No more credit card bills. And another great thing—your once horrible credit score is looking fantastic. Now every month you can enjoy the fact that your paycheck all goes to you. Now that you’ve worked hard to reach this point, let’s make sure you keep your family in the black. As a couple, you’ll have to work hard and communicate about your spending and income. You can make decisions together about investments, savings accounts, college accounts, and retirement. Finding a partner with horrible credit doesn’t mean that it is a scenario that can’t be mended. Instead, with honesty, hard work, dedication, and lots of self-control, you can let your control of your finances strengthen your relationship, rather than tear you apart.
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