If your partner’s credit needs a boost, you can be the person who helps make it happen.
Nobody is perfect, and in every relationship, there are bound to be things you and your partner don’t like about one another. But what if your partner’s shortcomings relate to his or her credit score?
If your long term romantic partner has poor credit, it can impact you as well. Imagine you’re looking to buy a home together. If your partner’s credit score is awful, it’ll lower your chances of getting approved for a mortgage.
The good news? You have the power to help your partner improve his or her credit. Here’s how to go about it.
1. Get your partner on a budget
The better a handle your partner has on his or her money, the easier it’ll be to pay his or her bills every month. This alone can lead to improvement on the payment history front. Payment history speaks to one’s ability to pay bills on time, and it’s the single most important factor that goes into calculating a credit score. And if you can get your partner to follow a budget, he or she will be less likely to miss payments due to a lack of funds.
If you and your partner live together and are sharing expenses, it’s especially crucial that you establish a budget so you aren’t dragged down by your partner’s potentially reckless spending habits. Map out your joint and individual expenses, figure who’s responsible for paying what, and make sure your partner’s outgoing bill payments don’t exceed his or her income on an ongoing basis.
At the same time, help your partner identify expenses he or she can cut back on — or find expenses you can cut back on together. For example, if you pledge to cook jointly at home, your partner won’t feel compelled to waste money on takeout. Doing so will free up cash that can be used to pay down existing debt, which is another way to help improve a poor credit score.
2. Make your partner an authorized user on your credit card
Adding your partner as an authorized user to one of your credit cards will allow him or her to benefit from your smart money habits. When you pay your bills on time, your partner’s credit score improves because of your financial behavior. Just make sure your partner doesn’t charge expenses you’re not comfortable with. In fact, be sure to set expectations — if your partner is going to rack up charges on a card in your name, make it clear that you expect him or her to pay for them.
And even if you trust your partner, it’s a smart idea to monitor activity on your card once he or she is added onto your account. That way, you’ll see if he or she is going overboard and can step in before you end up with a huge balance you’ll be stuck paying it off.
Remember, too, that if your partner racks up too high a credit card balance on your account, it could hurt your credit score by driving up your utilization ratio. Utilization speaks to the amount of available credit you’re using at once, and whenever you use more than 30% of your credit limit, your score is in danger of taking a hit. That’s why it’s crucial to talk to your partner about charging expenses in moderation and paying them off quickly — or at least intervening when you see your balance start to climb.
3. Encourage your partner to open a secured credit card
A secured credit card makes it easier for people with bad credit to boost their scores. To open one of these cards, your partner will need to put down a cash deposit that serves as his or her credit limit. Then, as your partner charges expenses on that card and makes timely payments, his or her score can climb. A secured credit card doesn’t offer much in the way of financial flexibility — your partner’s credit limit is tied to the deposit he or she comes up with. But it’s worth going through the motions for the credit score boost alone.
Having a partner with bad credit can be challenging for both of you. If you can support your partner in changing his or her habits for the better, you’re likely to find that in time, your partner’s score gets the boost it needs.
Our #1 cash back pick has a surprise bonus
This may be the perfect cash back card! That’s because it packs in $1,148 of value. Cardholders can earn up to 5% cash back and avoid interest until 2021. With such a deep bench of perks you’ll wonder how this card packs in a $0 annual fee. Best yet, you can apply and get a decision in two minutes. Learn more with our in-depth review.
The Motley Fool owns and recommends MasterCard and Visa, and recommends American Express.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.