Editorial Policy

Come Clean About Bad Credit Before You Marry

Erica Sandberg

December 8, 2011

QDear Erica,
I’m in a weird position and am praying that you can give me some good advice. I have a girlfriend who I want to marry. She’s the love of my life. She’s incredible. Beautiful, smart, educated and everything else I could want. But then there’s me. She doesn’t know that I’ve had some money problems in the past and that they are actually not so much in the past. I cashed out my 401k a couple of years ago and had a huge tax bill (it was over 10 grand). I used my Wells Fargo credit card to pay it, but fell behind on paying that card and now it’s with their collections department. Now it’s over 12 grand and growing. My credit is shot. I have a job, but can’t keep up with the payments. I know I need to tell her, but I’d rather tell her when I have a plan in mind. Can you help me so she doesn’t run? I don’t think she will because she’s so awesome, but you know what I mean. Also, Erica, will my bad credit hurt her? — JasonTh_financial-habits-couples-in-trouble

ADear Jason,
Absolutely you should confess your credit sins before you get down on one knee! And you’re also right about knowing how you’re going to resolve the situation before speaking up. A, “My darling, I’ve got a problem, but I’m handling it this way … ” will surely help ease her freak-out.

Any savvy adult would be worried if a loved one revealed a serious financial issue. The fact is, a marriage isn’t just a romantic connection — it’s also financial and legal.Ask Erica

While your future wife (assuming she says yes) won’t be held responsible for any pre-wedding obligations, nor will her credit reports reflect your damage, your past borrowing habits can be a predictor of how you’ll do later on. You’ll need to change that.

Additionally, you’ll want to enter into the union free of old liabilities. Therefore, two plans are in order: one to get your current debt under control, and the other to prevent the same mistakes from happening again.

For your present money problem:

1. Reduce the balance by selling things.
Take a look around you and determine if there is anything you own that you can sell. If so, do so and use the proceeds to delete some of the balance.

2. Earn more.
A fire sale won’t help? Start investigating ways to earn more money. Even if your job is full time, consider part-time work to augment your income. Anything to increase the amount of money you have coming in to go toward the debt.

3. Reduce spending.
Cut out every unnecessary expense and live low. No lunches out, drinks with the guys, trips to the movies … commit every spare dollar to the credit card account.

4. Determine your repayment timeline.
Find out exactly how much you have to apply to the debt and plug that figure into a calculator. This will give you a clear idea of how long it will take to be in the black. When you pay on time and delete your debt, your credit will recover.

Now, think about her reaction if you were to tell her about your negative circumstances, but are able to immediately show her that you’ve taken strong and sensible action. After the initial shock, I bet she’d be impressed.

However, you’re not done yet, Jason. You’ve also got to assure her that the future will look very different from the present:

1. Change the way you charge.
When you’re ready to pick up the cards again, do so in a totally different way. Slowly, and for those things that you’ll definitely pay in full.

2. Become a money management pro.
So many people are tripped up by two things: a lack of financial organization and attention. Review your credit card balance and checking account constantly and stay on top of bills. Oh, and leave the cash in your retirement account alone until you can begin withdrawing from it without taxes and penalties being applied.

3. Be transparent.
Many people have trouble talking about money, but in a relationship you’ve got to do it. Never hide problems! Get into the habit now of discussing financial matters. Before walking down the aisle, both of you need to pull your credit reports and share what’s on them.

Will such a lovely woman accept your proposal? It sounds like you’re in love, so I hope so. Let me know!