Collaborative Post
Starting your life together is an exciting next step for any couple but it’s natural to want your financial situation to be as stable as possible. You don’t want your future to be weighed down by bad credit or poor decision-making from your youth that has racked up debt.
Your credit score is a prediction of your financial behaviour, such as how likely you are to pay a loan back on time. It can be used to decide whether you will be offered credit products such as mortgages, auto loans and credit cards. A low credit score could get in the way of you achieving those important milestones, such as buying your first home and paying for your wedding.
Establishing Joint Financial Goals and Communication
Establishing joint financial goals together will help provide direction for you and your partner and will help create a mutual finance plan. You should encourage regular discussions about your financial aspirations and the potential challenges that could arise.
Clear communication is key to ensuring that you are both working towards the same end goal. All credit-related discussions should be approached calmly and positively, even if any obstacles come up.
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Building a Solid Foundation
Even if you have a basic understanding of credit scores, your partner may not be financially aware so you should educate each other calmly and honestly. You can start repairing your credit score together by sharing your major expenses in a joint bank account. This will both give you control over your finances and transparency to see what each other is spending.
There are many ways to begin boosting your credit score, including making regular payments on time or building your credit history. You can also keep your credit utilisation low. This means if you have a credit card limit of £1,000 but only use £500 then your credit utilisation is 50% and a low percentage is seen positively by lenders.
Strategic Credit Management
Credit cards are a great opportunity to build credit, but they can easily lead to spiralling debt if not used sensibly. Adopting responsible credit card practices and being aware of interest rates will help you keep control of your spending habits and work steadily towards your goals.
If both you and your partner have little experience dealing with finances or you both have a poor credit score, don’t hesitate to get in touch with a financial advisor.