Not-yet-wed couples on Valentine's Day exchanged cards, kisses and — if they're really serious — chocolates. Why not credit reports? Once this would have been unthinkable. But modern lovers are less bashful than ever about discussing finances, financial experts say. Thank the weak economy for this new openness. The Great Recession has raised the desirability of financially responsible soul mates, according to some recent surveys. For instance, two-thirds of singles polled for PayPal's annual couples survey said they don't want to date someone deep in debt, and one-third would delay marriage until a partner improved his or her credit score. In a separate survey by FICO, creator of the widely used credit score, about half of singles said they wouldn't date anyone with a score below 650. It takes at least a score of 760 to get the best mortgage terms. As you become more committed to the relationship, here are some tips to navigate finances:
SHOW ME YOURS: Exchanging credit reports can be highly revealing, much more so than a credit score, says Rod Griffin, who writes an advice column for the credit bureau Experian.
A score tries to predict if you're a credit risk to lenders. But the report reveals more relevant data, including outstanding credit card balances, late payments or a bankruptcy in a lover's past, Griffin says. Plus, reports are free yearly at annualcreditreport.com.
Obviously, demanding to see another's credit history on the first or second date would scare off most. But you definitely want to see a report and credit score months before making a major purchase, like a house, together.
HONEY, CAN YOU SPARE A DIME? Lending money can quickly change a relationship — for the worse. The lender may resent a borrower who continues to spend while the loan sits unpaid. The borrower may chafe under not-so-subtle hints to pay up.
For the relationship's sake, consider the money a gift with no expectation of seeing it again, says Sheryl Garrett, a financial planner and co-author of Money Without Matrimony. And if your loved one someday chooses to repay your generosity, all the better.
CO-SIGNING HAZARDS: You may be tempted to help by co-signing on a mate's loan or mortgage. But this puts you on the hook for repaying the debt if your partner doesn't.
"It's like a minefield. You can make it through without things blowing up. But when they blow up, they blow up in a big way and you're in trouble," says J.D. Roth, editor of the blog GetRichSlowly.org.
Maybe you can't imagine your significant other walking out on you or a debt. But it can happen, and a lender isn't going to forgive a loan just because the two of you have split.
PLASTIC PARTNERSHIPS: Depending on the issuer, you may be able to add a loved one who can't qualify for a credit card as an authorized user on your card. The two of you will share the credit history on this card, which can boost your mate's credit score if bills are paid on time, said FICO spokesman Craig Watts.
An authorized user can make purchases with the card but isn't liable for the bill. The primary cardholder is responsible for the debt, which again holds risks.
A better option: Have your sweetheart use a debit or secured card tied to his or her bank account.
OWNING PROPERTY: When buying a house or other property, write up a co-ownership agreement, said Frederick Hertz, a lawyer and co-author of Living Together: A Legal Guide for Unmarried Couples. Include how much each contributes toward the purchase, who pays the taxes, insurance or other expenses, and how the property will be divided if you break up or one dies, he says.
Many unmarried couples are buying houses together to get the $8,000 federal first-time home buyer credit. Some couples put the mortgage and house in the name of the most credit-worthy partner, even though the other is helping with the down payment or mortgage.
Hertz discourages this. But if you choose that path, have a lawyer draw up a written agreement to protect the interests of the partner not on the title, he says.
LOVE AND MONEY: Sure, nice eyes and a great personality help people pick a mate. But recent surveys by PayPal and FICO reveal that finances and money management are factors for many when choosing a partner:
• One-third of singles would not move in or walk down the aisle with anyone who didn't make a "fair amount of money."
• Forty-two percent believe a partner spends too much money.
• Forty-five percent of couples fight about finances at least once a month.
• Couples now fight most about money and finances; last year, it was household chores.