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Relationships And Money: When Should I Ask My Partner About Their Credit Score?

Should I ask my partner about their credit score

Money talk: Why the question “should I ask my partner about their credit score” is important

Do you regularly set aside time to talk about money with your partner? If not, you are not alone. In a recent survey by Relationship Australia, only 37% of Australians have stated that they fully discussed their financial situation with their partner. If you are wondering how you should handle the financial side of your relationship, or you find yourself asking “should I ask my partner about their credit score”, then we’ve got some conversation starters for you.

Time for some real talk: For many Australians, finances are a taboo topic with friends and even with their partners. However, if you are planning a future together, it is important to know where you both stand financially and if you have the same goals. So, you’re likely wondering, “when should I ask my partner about their credit score?”

It’s never too early to talk about finances. Relationships Australia states financial stress as the number one reason for relationships to break down. While money still seems to be a tricky topic for most people, it can make your relationship flourish. Of course, it may not be the best topic to start with on your Tinder date, but knowing each others’ credit score and financial situation is important for any serious relationship.

Benefits of knowing your partners’ financial situation

  • Making informed decisions as a team
  • Helping and supporting each other with financial distress
  • Knowing your combined borrowing power will help you make better future decisions
  • Setting joint financial goals

Why financial intimacy matters

While Relationships Australia has found that 73% of Australians think their partner’s financial situation doesn’t matter at all or very little to them, it can have a significant impact on your future. Imagine you only find out that your partner has debt or a bad credit score when you are trying to apply for a mortgage or a joint loan. If you have this conversation early on, you both can be more comfortable and confident with your joint financial situation and tackle potential problems early on. A healthy relationship means honesty in all areas, including your finances.

Money problems, especially debt, are a big stressor in many relationships. If you are serious about your commitment, then the answer to the question “should I ask my partner about their credit score” is yes. You should ask your partner about their credit score and financial situation. Of course, this will only be effective if you are equally open about your own situation.

Relationships and credit scores

Your credit scores tell future creditors if you normally pay your bills on time and how high the risk is that you may miss a payment. When you ask your partner about their credit score, you can find out much more about their financial habits and their relationship with money. Having a low credit score doesn’t mean someone is a bad person. However, it may be an indication that personal finances are not their strong suit and that is something you can work on together.

In Australia, you actually have more than one credit score. Experian and Equifax are the two major credit bureaus that collect data about your previous and current credit history. Their scores range from 0 to 1,200/1,000 and, as a rule of thumb, a score above 800 is considered a good credit score.

When should I ask my partner about their credit score?

Another question we get a lot here at Tippla isn’t just should I ask my partner about their credit score, but when. Talking about money doesn’t come easily to everyone. However, if you want to plan a future with your current partner, it is important to know where you are standing and what your joint goals are. There is no right or wrong time to ask your partner about their credit score. However, this chat is definitely due once you start thinking about merging finances together. Joint bank accounts or credit cards mean joint responsibility and it’s only fair for both of you to know where you are standing.

In the future, you may consider bigger financial commitments such as personal loans or even a mortgage. It’s best to know each other and your spending habits well before signing off on anything big.

Setting financial goals together

Even if you don’t plan to buy a house just yet, talking about financial priorities and where your money should go is an important step in any relationship.

Joint bank accounts

There may be a point in your relationship where you consider opening a joint bank account. They are an easy way to pay for joint expenses for living and on holidays. However, you should be aware that you are both equally responsible to pay for any expenses on it. To keep your relationship happy and healthy, you should have a chat first to see who’s responsible to pay for what and what would happen with money on the account if you were to split up in the future.

Joint credit cards

It is even more important to have this conversation before activating a joint credit card. Both of you are legally responsible for paying off any credit card debt no matter who takes out the money. Joint accounts will affect both your credit scores and, therefore, you should know your partner will use it responsibly.

Loans and mortgages

Taking out a loan or a mortgage together is a huge responsibility. You should ask your partner for their credit score months before you seriously consider applying. If there are any issues, you may have enough time to fix them so that you can get better interest rates and loan terms. Otherwise, it may be sensible to wait until your scores have improved.

See where you’re both at

While it may feel like a difficult discussion to have at first, it doesn’t have to be! Skip the blame game. Talking about finances simply means to know where you are at. Remember the last time you felt bad because you felt obligated to pay for an overpriced dinner? If you and your partner had talked about your financial situation prior to that, you would have known about each other’s financial priorities and budgets.

Important topics to talk about include

  • income
  • regular expenses
  • assets, including your house and car
  • super and investments
  • debts and loans

It’s important to know your credit score situation first, before taking a look at your partner. Tippla helps you compare and monitor your credit scores for no cost whatsoever.

What if my partner has bad credit?

If you ask your partner about their credit score and the outcome is not great, don’t be frustrated. A bad credit score is not the end of the world and doesn’t have to negatively impact your relationship. Mistakes happen, and unfortunately, some of them stay on your credit report for up to 7 years.

The good news is that your partner can build up their credit score over time, the earlier you start the better. Teaching each other good financial habits can be wholesome and nourishing for your relationship as long as it happens in a caring way. Try to understand where your partner is coming from and what their struggles are.

  • A first step could be to sit together and get an overview of their financial situation. How much are they earning, what financial commitments do they have?
  • Thoroughly go through their credit report and check if everything is correctly listed. A mistake on a credit report can make them lose valuable points.
  • Develop strategies together to repay debt. A lower debt to credit ratio can already improve your credit score immensely.
  • There are two ways to approach personal debt: You can start by making the minimum payment on all debts. Pick the smallest one and use spare cash to pay it off as quickly as possible. Then use the new spare cash to tackle the next debt, one at a time. This is called the snowball method. Alternatively, you can focus on the debt with the highest interest rate first. This will save you money over time but take a little longer until you have your first success.
  • Work out a realistic budget together. Some people may struggle to cap their spendings by setting up budgets for certain areas. However, it is important to have an eye on your spendings to help you save money and get your finances under control.

What is a good credit score? Here’s how Equifax and Experian categorise your credit scores:

what is a good credit score, good credit score

Source: Experian and Equifax

Where to get help if your partner is bad with their finances

If you already joined forces together but you are unhappy with the way your partner is managing their finances, you can get help.

Talking to your partner about money and finances is difficult? If you don’t know how to ask your partner about their credit score, you may want to look for a relationship counsellor to help. You can find resources on

If you and your partner struggle with personal debt, seeing a free financial counsellor may help.

Should I ask my partner about their credit score?

To summarise, in answer to the question – should I ask my partner about their credit score, the answer is yes. In a committed and open relationship, you should be willing to share this information. It’s also so important to know your financial position before you make any big decisions.

Sources: Relationships Australia Survey 2019

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The New Way Of Spending: Buy Now Pay Later And Your Credit Score

a lady making a purchase on a buy now pay later platform

If you did online shopping during the lockdown, chances are high that you came across Buy Now Pay Later. With shops staying closed all over the world, the online sector experienced a new high. Some companies were well equipped already, others had to react quickly to move their sales online.

The trend of Buy Now Pay Later

While more and more shops are reopening again, the crisis managed to prove a point: The trend goes towards online first. Buy Now Pay Later (BNPL) services like AfterPay, Zip, or Humm experienced a boost of 22% and have become progressively more popular.

Let’s have a closer look at Buy Now Pay Later and does it affect your credit score?

What is Buy Now Pay Later (BNPL)?

If you want to make a purchase but don’t want to spend the money at once, buy now pay for it later is the way to go. As the name suggests it allows you to split the full price over multiple payments. There are multiple providers (Zip and AfterPay being the most popular ones currently) that offer these instalment schemes.

However, you can’t endlessly spend. Each account has a set limit, depending on the provider. To purchase through a BNPL account, the shop you are buying from has to offer this service as a payment method. You will have to set up an account and link it to a debit or credit card.

What you can purchase

There is a wide range of products that can be purchased with BNPL these days. Most retailers offer options to defer payments but also medical providers like dentists also often allow you to spread payments over multiple payments.

If you would like to purchase a product through BNPL, check with the store which options they offer to you. Just be aware that most likely, you can only make purchases up to a certain amount of money as your BNPL provider will restrict you to a set credit limit with them.

How Buy Now Pay Later Works

Similar to a credit card, BNPL providers charge stores a small fee for using their service as a payment method. You can sign up for a PNBL service directly through the page you are purchasing from. Once you are signed in, you will learn about the payment terms and what your instalments will look like. Your account will be linked to a credit or debit card, so your payments will go out automatically.

While splitting the payment is interest-free for you, your account may come with associated fees such as set up fees, monthly fees, and penalty fees for late payments. Especially for smaller purchases, it’s worth doing the maths upfront to see if you might save money by paying it all in one go.

How Coronavirus affects our spending habits

Retailers have been bracing themselves for large cuts in their revenues due to Coronavirus. Thousands of Australians have been stood down and have to be more mindful with their spendings while others don’t feel comfortable entering crowded stores again, even with the necessary restrictions in place. Many customers have been shifting their shopping to ordering online and either ‘click and collect’ their items from shops or get them delivered to their doorstep.

Fewer people were getting cash out over the last few months, ATM withdrawals have plunged by nearly a third. Meanwhile, contactless payment methods are on the rise and BNPL experienced a 22% increase since Corona hit Australia. While the restrictions ease off and many stores return more or less to business as usual, the pandemic may have changed the way we spend money in the future.

Does Buy Now Pay Later affect my credit score?

Your credit score is a number between 0 and 1,200 that represents your creditworthiness to potential lenders. It is based on your credit report including factors like your credit accounts and your current and previous repayment history. Your credit report logs any requests that companies make when checking your creditworthiness. So, how about Buy Now Pay Later accounts?

That depends! You should be very mindful when setting up BNPL accounts as some of them will conduct a credit check. Every one of them may check your identity through a credit bureau, however, that does not always affect your credit report.

Like any other lender, BNPL providers can make two different types of enquiries: Soft enquiries can be used to identify you and get a quick overview if you are capable of making frequent payments and won’t leave a mark on your credit score. In contrast, hard inquiries request your full credit report and will be noted. They can have a negative impact on your credit score, therefore, you should check what sort of enquiry a BNPL company will send.

BNPL providers and credit checks

We have gathered a list of the most popular Buy Now Pay Later providers and their attitudes towards credit checks. However, their regulations can change at any time and you should always do your research before you sign up for any service on their costs and fees and how having an account with them may affect your credit score.

Provider Hard Credit Check 
Zip Pay Yes
Zip Money Yes
AfterPay No, but they have the right to ask for your credit report.
Humm No
OpenPay Yes
SplitIt No
Klarna No

 

While no credit check may sound like a great advantage at first, it comes with a fair bit of risk. It is much easier to overspend on BNPL as you are more likely to make a bigger purchase that you may not want to afford in one go. Plus, a whole lot of little purchases could, if you’re not careful, add up to a fair amount in fortnightly or monthly repayments.

Positive payment behaviour on BNPL won’t improve your credit score while an entry for a late or missed payment will still hurt it. Therefore, it is important to use BNPL responsibly and to make your payments on time.

What you can do to use BNPL responsibly

There is nothing wrong with the idea of wanting to see your money in your bank account for longer. Especially for slightly bigger purchases, it may feel more comfortable to space out payments. However, using services like AfterPay can easily change your spending attitude.

If the initial price of your purchase was $400, but you split payments it might feel like you only spend $100. However, you set yourself up to pay an additional $100 for the next three weeks (or whatever period you choose) that you may not consider in your budget.
This can quickly add up and leave you with additional fees for late payments and a negative entry in your credit report.

  • Factor BNPL into your budget. When planning your spending for the next month, include your BNPL payments into your budget as you would with any other spendings. If you already have payments lined up, block that amount in your budget to make sure you meet your payment obligations.
  • Only have one BNPL account at a time. It’s very easy to lose track of your spending if you have to include multiple accounts in your budgeting. Multiple companies offer BNPL solutions but it’s best to set up one account and stick to it. It will make your life much easier.
  • Set up auto-pay for your repayments. Most companies will directly debit the outstanding amount from your credit card on a certain date. If this is not the case, make sure that you either pre-schedule the payments or at least set yourself a calendar reminder. Missed payments may cause you to be charged late-fees and may even end with a bad entry in your credit report.
  • Check your credit report frequently. Even though using BNPL shouldn’t affect your credit score, your provider may report late payments to your credit bureau. Mistakes happen, even if you make your payments on time. Therefore, you should keep an eye on your credit score and use a tool like Tippla to check it regularly.
  • Be aware of any additional costs. Before you sign up for any service, you should check their costs and fees. Not all services are the same. Some may charge you monthly fees or setup costs for your account. Additionally, you will be charged extra fees for late payments.
  • Link your account to your debit card instead of your credit card. You most likely chose BNPL because it is interest-free. However, if you link it to a credit card, you risk spending money that you don’t have. This could then cost you fees in interest that you were trying to avoid in the first place.

Is Buy Now Pay Later a safe way of spending?

It certainly is. Your BNPL provider will verify your identity to ensure your credit account is matched with the right person. However, you should be mindful to budget responsibly to protect yourself from overspending.

If you are concerned about potential damage to your credit score, you should make sure to check if a provider will perform a hard credit check that may be listed in your credit report. Checking your credit report frequently for any mistakes is a good idea either way.