This article was originally published by CompareHero.my, in partnership with CTOS and has appeared in The Star Online.
Your credit score is definitely important when applying for a credit card or personal loan. But should you also consider it when searching for your significant other? I would actually argue ‘yes’, because money – or the lack of it – is still the number one cause for breakups of relationships and your credit score is a reflection of your money habits.
Now, it is easy to say you are a saver, but are you practicing what you preach? Credit scores are based on your past factual behaviour and are therefore a better indicator of your future behaviour than what you are saying about your own financial behaviour.
For example, in Malaysia, CTOS calculates your credit score (among others) on your payment history, history length, the amounts and the types of credit facilities you owe. This is translated into a 3 digit number between 300 and 850. Higher scores imply higher chances of getting approved for personal finance products like cards and loans.
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So if you are a 700 and on the lookout for a date, you should be looking for a 700 or 750, but definitely not drop below a 650. In fact, in the United States, a dating site exists which matches people, based on their credit score. Is a good credit score sexy? At the very least, a bad credit score is unsexy. Although using a credit score for dating purposes was described by my colleagues as ‘premature’ and ‘Singaporean’, they could definitely see the advantages of hooking up with someone with like-minded money habits. It makes sense: you are looking for someone who can pay his or her own bills and take care of himself or herself financially.
The question would be whether matching two people with equally terrible credit scores is a financial disaster waiting to happen? Also, would a couple with unequal credit scores be able to lift the bad score up, or would the good score be dragged down? A study from the Federal Reserve Board gives some answers.
Based on the credit records of millions of Americans over 15 years, the study concludes that couples with a large gap between their credit scores have a higher chance to separate, than those whose credit scores are similar. The credit score of
people in a long-lasting relationship are not only highly correlated, they also tend to converge and grow even closer. Good news is that the lower score moves up more than the higher score moves down.
Single people with high credit scores have a much higher chance of forming a relationship in the next year, than people with low credit scores. Finally, the odds of a break up are about twice as high for people with a terrible credit score as they are for
people with an excellent credit score.
The study gives credence to the idea that having a great credit scores is in fact, sexy and it makes sense to see of your credit scores ‘match’. Luckily, improving your credit score is much easier to attain than other things which are considered attractive, such as being beautiful, smart, rich or funny. Better pay your credit card bill on time!
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