New research suggests that your credit score could influence a whole lot more than whether you qualify for a loan. It could even influence how successful you are in forming and staying in a long-term relationship.
It turns out that your credit score has a strong correlation with how trustworthy you are. As the study shows, those who are irresponsible with their money may not be the best romantic partners.
Credit scores have long been used for many purposes, including rental and employment as an indicator of dependability and tendency to follow through on a variety of commitments, not limited to those involving credit.
Economists from Brookings Institution, UCLA, and the Federal Reserve Board analyzed data on 12 million U.S. consumers over a period of 15 years. The results of the study can be found in the Federal Reserve paper, “Credit Scores and Committed Relationships.”
Birds of a (credit score) feather flock together
The researchers found that people tended to enter into relationships with those who had similar credit scores.
The average credit score of the sample at the beginning of the study was 660. Generally speaking, the couples had credit scores within about 69 points of one another, while randomly matched strangers had credit scores with around 150-point difference. Those couples that had credit scores more than 66 points apart were more likely to split up about 2 to 5 years into the relationship.
Why do people tend to connect to others with similar scores? The researchers aren’t sure, but they speculate that people either ask prospective partners directly about their scores, or they observe (consciously or unconsciously) the characteristics that tend to correlate with credit scores.
The researchers also found similarities between partners in such information as bankruptcies, total debt, credit utilization, derogatory marks, credit inquiries, and length of credit history.
Good credit = good relationships
If you’re looking for love, your chances are best if you have a credit score between 750 and 800. People with low credit scores are up to 30% less likely to find that special someone.
Higher credit scores also predict more stable and longer lasting relationships. Couples who started out with higher-than-average credit scores and were together for at least two years were 37% less likely to separate.
Mismatched credit scores is a bad sign for the relationship
Those with significant differences in their credit scores tend to have difficulty accomplishing certain financial tasks, including finding a place to live, furnishing a home, and establishing savings. These issues could lead to financial problems that could end up straining the relationship.
Large discrepancies between credit scores tended to predict a likelihood of financial issues. Couples with very different credit scores were 19% more likely to file bankruptcy, 10% more likely to have their home foreclosed, and 15% more likely to have derogatory marks on their credit reports.
These financial woes proved to be a bad omen for relationships. After a bankruptcy, couples were approximately 50% more likely to split up.
Financial and family commitments
The moral of the story in this study is that financial and family commitments are not always as different as they may seem. A person’s financial dependability can be a good indicator of their general dependability.
“If you are in the mindset of looking for a long-term relationship, looking for someone to spend your life with, you want to talk about finances,” says Niem Green, founder and CEO of the dating site CreditScoreDating.com.
You need to make sure you and your partner are on the same page. You need to discuss your habits, goals, and what you want in a relationship. It doesn’t sound romantic, but it’s important that you know how you want to spend your life, and that you find someone who feels the same.
Still looking for more? Feel free to check out our comprehensive personal finance guide to learn more about managing your budget and staying financially healthy.
[Featured image credit: Mike Cherim / Image cropped]