Why it is important to check credit score of your prospective spouse

Marriage is one of the important decisions you will take in your lifetime. Women consider various factors like profession, personality, compatibility, family background before zeroing in on their life partner.But have you ever thought of taking into consideration one of the most important factors in a couple’s life - financial compatibility?

Like any major milestone in life, marriage is something that should be carefully planned for. It is imperative that you know about the financial health of your would be spouse. It does not imply that you consider marrying somebody solely on the basis of the income earned but it is very essential for you to know how well your prospective spouse is handling finances or credit.

Anita has been happily married to Raj, an ambitious and well paid executive working with an multinational company in Chennai. A year into their blissful marriage, they decided to buy a home of their own. Since Anita had started working and was earning a monthly salary, they applied for a joint home loan. However Anita was shocked to learn that their home loan application had been rejected due to their credit history. On enquiring further both Raj and Anita were asked to obtain their credit reports and scores from a credit bureau.

After receiving their credit reports, they realized that while Anita’s credit history and score were good, Raj’s credit history had defaults and written off status on several credit cards and a personal loan. It was then that Raj confessed to Anita that he had been reckless in spending before marriage and therefore had incurred large amount of credit card debts and also had failed to pay a personal loan he had availed for their wedding.

At that moment Anita realised that Raj lacked financial discipline and this, if not checked in time, will create serious consequences for their future. The couple then sought help from a financial counsellor and worked towards paying off Raj’s debts and rebuilding a good credit history and score.

It is therefore crucial that you should be aware of each other’s spending habits and how you manage credit, before you decide to tie the knot. As a couple both of you should keep checking your credit history regularly as it will help you know where you stand on financial grounds and plan for future prosperity together. So how exactly should you check you financial compatibility?

Both of you need to purchase a copy of your Credit Report from a credit bureau. Simply put, a Credit Report is a month on month record of an individual’s loan-related EMI (home loans, personal loans, automobile loans and so on), credit card or overdraft payments.

Just like you would discuss your personal goals, family goals and aspirations you must also discuss your financial goals with each other. Sit together and discuss your credit reports along with your financial goals. It will give you insight to the following questions:
• Is your credit history and credit score healthy or does it indicate defaults and reckless credit behaviour?
• Are both of you financially stable?
• Have you been paying off loans on time or do you have a debt burden?
• Do either of you have too many credit card dues to be paid off?
• Will you together be able to achieve your financial goals in the future?

This is a good starting point for a discussion about what you’ve learned (or still need to learn) about handling money. If there are errors or low credit scores that a couple can improve, there may still be time to make amends so that you can get the best credit terms for your first home a year or two later.

Credit also impacts so many other areas of our lives that we are not aware of until we actually face a situation. It certainly doesn’t mean that you shouldn’t marry someone who has not managed his credit well. It is just a question of being aware of the financial position that you are placing yourself in before you say “I do”.

None of us want to create obstacles to our own happiness, and we all want the prelude to marriage to be pleasant, just as we want our marriage to be happy and prosperous. But it’s better to learn of financial realities sooner rather than later, so consider disclosing and discussing your personal finances before you marry, and, by all means, make a budget before you marry.

The author is senior vice-president, consumer relations, CIBIL