Why Looking At Credit Scores Might Not Be a Bad Idea Before Making A Commitment In A Relationship
The Federal Reserve Board has recently published a working paper entitled, “Credit Scores and Committed Relationships.” In it, authors Jane Dokko, Geng Li and Jessica Hayes explore the potential correlation between one’s credit score and their likelihood of being a good partner or spouse. The study’s results seem to suggest that people with higher credit scores are more likely to be in committed relationships. In addition, the authors argue that how well a couple’s credit scores match initially, may also be a good indicator of whether the relationship has staying power. To read the full study see, https://www.federalreserve.gov/econresdata/feds/2015/files/2015081pap.pdf.
The study conducted between 1999 and 2014, used 12 million randomly selected people from the Federal Reserve Bank of New York Consumer Credit Panel/Equifax. Within this sample, researchers used an algorithm to find people who lived at the same address as another consumer from the sample. Certain restrictions were applied to ensure that the pair was in some type of committed relationship. Their credit scores were then monitored only so long as they retained the same address. Once the pair no longer lived together, the research ended.
The results of the study showed that people with a higher credit score were more likely to form and stay in, long-term relationships. This was true even when other outside factors such as race, education and income difference between partners, were controlled. In addition, the higher the scores were to begin with, the less likely the couple was to split over the next couple of years. However, while the level of the individual credit scores played a role in whether the relationship would last, how alike the scores were was of equal importance. The research demonstrated that the more equally matched a couple’s credit scores, the more likely they are to stay together.
Finally, the researchers found that the study’s results show that couples are generally more likely to have similar credit scores as compared to those of 2 random strangers. This result supports the notion that a couple’s credit score tends to converge over the first 4 years of the relationship.
So, the question then becomes, why the correlation between a person’s credit score and their ability to form and stay in a committed relationship?
The authors suggest a few key reasons for the study’s findings. First, they argue that credit agencies typically use the lower of a couple’s individual scores when determining their potential credit as a pair. Therefore, if one partner has a low score, especially compared to the other, it can place a strain on the relationship as credit often affects important aspects such as buying a home and the type of overall lifestyle a couple will have. Because financial strain is one of the leading causes of divorce and/or breakups, the authors suggest that it is no surprise that a couple with relatively unequal credit scores is more likely to end their relationship as compared to a couple where their credit scores are more equally matched.
Additionally, credit scores are usually based on a person’s potential to default on a debt and their overall debt to income ratio. Therefore, the authors claim that those with lower credit scores may be financially unstable or irresponsible which, in turn, may be a foreshadowing of the financial stress to come.
Finally, the authors seem to believe that a person’s credit score may reflect their characteristics and qualities as a partner, namely, their trustworthiness and responsibility. If a person has a higher score, they argue that this number gives insight into not only their commitment to financial obligations, but into their commitment and trustworthiness overall.
What’s You Credit Scores? Let’s Have A Long-Term Relationship…Or Not!
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Robert L. Mues
Robert Mues is the managing partner of Dayton, Ohio, law firm, Holzfaster, Cecil, McKnight & Mues, and has received the highest rating from the Martindale-Hubbell Peer Review for Ethical Standards and Legal Ability. Mr. Mues is also a founding member of the "International Academy of Attorneys for Divorce over 50" blog.