Should relationship status affect credit score?

We are often looking for “predictors” to help us make the right choices.

One of the key data points that lenders use to predict whether you’ll be able to pay back a loan is a credit score. The higher your score, the more likely it is that you’ll pay your debts as promised.

Auto insurers use credit-based scores to help determine how risky of a driver you might be to cover. Some employers use your credit history as part of the hiring decision, although there is very little research to prove that a bad credit score equates to a bad employee.

Now three researchers, in a working paper for the Federal Reserve, have identified a link between credit scores and committed relationships.

Jane Dokko, Geng Li and Jessica Hayes looked through the credit files of 12 million randomly selected consumers in the database of the credit bureau Equifax. Looking over a 15-year period in the data, they examined how credit scores play a role in committed relationships such as marriages and long-term cohabitations.

The researchers found that when it comes to credit scores, opposites don’t attract. When there were wide gaps in scores when people first met, the more likely they were to break up. Partners who both have high scores tend to stay together.

“Credit scores, in addition to measuring an individual’s creditworthiness regarding the repayment of debt obligations, reveal information about an important relationship skill,” Dokko, Li and Hayes wrote. “We argue that one such skill could be an individual’s general trustworthiness and commitment to non-debt obligations.”

Now that we have this information, what should we do with it? Does this data ultimately mean that “What’s your credit score?” should be the new pick-up line?

The research suggests that financially responsible people are more likely to marry successfully, said Bradford Wilcox, an associate professor at the University of Virginia and the director of the National Marriage Project.

“Handling your money in a prudential fashion builds a sense of emotional security in your marriage for you and your spouse,” Wilcox added. “What’s more, combined assets serve as a stabilizing force in married life.”

Jeffrey Dew, an associate professor in the Department of Family, Consumer, and Human Development at Utah State University, also sees merit in the study’s conclusions. His own research focuses on the link between relationship quality and financial issues.

Dew believes more people need to understand that their money decisions affect not only their financial bottom line, but their “relationship bottom line” as well.

“It’s not surprising that people who are conscientious about financial commitments would be conscientious about relationship commitments,” Dew said. “Further, the bit about the closeness of a partner’s credit scores predicting relationship success makes sense, too. The closer one partner’s credit score to the other’s, the more likely they are to have similar views about how to handle money, for better or worse. Similar views on money management may mean less fights about money. Money arguments are particularly detrimental to couples.”

But a person’s credit score, just as when factored into getting a loan, is only one data point to consider. Having a low score doesn’t mean your mate isn’t a good catch. You have to look at the factors that led to a low score. Is the person’s score the result of medical bills or having been laid off?

“Couples need to discuss their personal financial goals, what money means to them, how much debt they have, etc.,” Dew said. “They need to assess their partner’s attitudes about spending. There is some research to suggest that tightwads and spendthrifts don’t make the best partners. Financial compatibility is key.”

Dew shared a lesson that I wish more couples would heed. He had a friend who spent an above-average amount on his fiancee’s engagement ring. Yet she was upset that the ring wasn’t good enough. It wasn’t a “designer cut,” which would have nearly doubled the price of the ring, Dew said.

The guy broke off the engagement because he realized then and there that they weren’t going to be a good fit.

“He could have saved himself a lot of time and money if they had discussed financial issues earlier on in the relationship,” Dew said.

Your credit score is not a number you should be disclosing if you’re not interested in a long-term relationship. By itself, it’s just a number without perspective. Just because someone has a high score doesn’t mean you’ll be well-suited. What if he or she is a miser but you have a generous spirit? Spend time learning about the person’s financial personality to determine if you share the same values.

So when should couples share their credit scores?

The first date is too soon, and after the wedding is too late.