Money And Relationship Guide

We're big believers in romance, as well as keeping your finances in order - so why not have the best of both worlds with our latest guide on money and relationships?

Five things you need to know

Managing your finances and your relationship can be quite a balancing act.

Being open and honest about money can help you and your partner live in harmony and achieve your shared financial goals
Understanding how to manage credit and debt, both individually and as a couple, will help support any credit applications you may need to make together in the future, such as applying for a mortgage
Your credit reports can become linked through a joint credit application, for a loan or mortgage – even shared utility bills
If you are linked through a ‘financial association’ and one of you has a poor history of managing credit and debt, it can have a negative effect on both of your chances of getting approved for credit in the future and at the best rates
If you and your partner decide to part ways, remember you must also officially ‘disassociate’ or remove the record of shared finances from your credit reports to ensure you are no longer affected by each other’s credit ratings

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Joining up your accounts

When things gets serious, it’s likely that you’ll start to share some financial outgoings; you might move in together and both take responsibility for the rent and bills, for example.

Maybe you’ll set up a joint bank account, or take out a loan in both your names to pay for joint purchases. When this happens your credit reports become linked by a ‘financial association’ – it’s worth noting that just paying rent together will not create a financial link on your credit reports.

The financial association will appear on both your credit reports. Your name (but not any financial information about you) will appear on your partner’s credit report, and vice versa.

Your partner’s credit rating can affect you

If you apply in just your own name – for a credit card, say - if you are financially associated, the lender might also check your partner’s credit report to see if the way they manage money might affect your ability to keep up repayments.

There are no hard and fast rules as to how lenders use this information – it all comes down to their own lending policy. If you have an excellent credit report and your partner’s isn’t quite as good, then getting credit may not be a problem. If your own credit report is quite good but your partner’s is poor, then this could affect the outcome of applications you make and in some cases cause your application to be refused.

Your partner’s credit rating can affect you

What happens as your relationship grows?

At the start of your relationship, financial planning might simply involve working out what money is coming in from your salaries and what's going out on bills and expenses. But as the relationship develops you’re likely to have to plan for all kinds of events and take on a whole range of financial products.

As your relationship grows, you may buy a house together (having saved a deposit), plan your wedding, have kids and all the costs they involve - not least childcare! You might put money aside for planning holidays and think about pensions and savings for your retirement together. Then there are the everyday things such as running a car, TV, groceries, and so on.

Many of these things are going to involve different products, such as credit cards, loans, mortgages, savings and investments.

Chances are the longer your relationship goes on the more financially entwined the two of you may become, making it even more important that you keep on top of your finances.

What happens as your relationship grows?

Managing your money

Here are some basic pointers that can help you and your partner live in financial harmony:

Talk about money with your partner. It might not be the most romantic of subjects, but talking about things will help you plan for the future, and avoid any unpleasant surprises that could hold you back as a couple
Remember, no two people are the same and we have all been guilty of having a little splurge every now and again, even if we know we shouldn’t. The question is whether your financial secrets risk hampering your shared goals for the future
Whatever your financial situation, it’s yours to control. Understanding your spending, savings, debt and how you can achieve your future goals will help you get on the right track for the future
If you find yourself struggling and stressed about debt, don’t be afraid to ask for advice from StepChange, the Money Advice Service or Citizens Advice Bureau

Learn more about CreditExpert

The dos and dont's of relationships and money

Do

Set the ground rules. Do you want a joint account for regular expenses and separate bank accounts for personal spending? Or do you want everything to go together?
Work out who does what. The more frugal partner could look after the budget, while the more extravagant works out the ‘treats’, like meals out or trips away
Agree on short and long-term goals and how you’re going to achieve them, and review regularly together
Be honest about your past. If you have a less-than-perfect history of repaying money you owe, this could affect both of you in the longterm if your credit reports become linked
Take time together to understand if you need to improve one or both of your credit reports. Do this well in advance of applying for credit together

Don’t

Spend all your time together talking about money
Keep secrets. Research from Experian shows that 29% of people in the UK discovered that their partner was keeping credit card debt from them
Dig yourself into a hole. If you find yourself in debt, don’t borrow more in the hope of putting things right. Ask for help and be open about it with your partner
Talk about money issues when you are angry. Arguing about money is never going to be productive
Expect your partner to completely change. It’s unlikely an extravagant spender will do a complete about-turn and suddenly become frugal

What happens when a relationship ends?

Sadly, not all relationships work out. There will be emotions and practicalities to deal with when this happens, and often there can be financial matters to address too.

Pay off any debts on loans and overdrafts you have together – then tell the lenders to formally close the accounts
Contact us and the other credit reference agencies (CRAs) and ask for any links on your credit reports to be broken. This is known as a financial ‘disassociation’. With Experian, you can do this by completing the financial connections questionnaire
If the only financial connection you have remaining is a joint mortgage, in certain circumstances it may still be possible to file for financial disassociation between you and your ex-partner

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Money & Relationships