Home > Personal Finance > How These Common Financial Skeletons in Relationships Can Affect Your Credit

Comments 0 Comments

Whether your Halloween costume is the latest animated character or a menacing clown (please don’t), many of us use the holiday to feel free to step outside ourselves and become someone else for one night.

But, get this: For nearly half of U.S. adults, donning a mask of secrecy doesn’t pose much of a challenge.

According to a 2016 Harris Poll done on behalf of the National Endowment for Financial Education (NEFE), 42% of adults in the U.S. reported that they have purposely deceived their partners in matters of household finance. Why is this revelation so terrifying?

“When you agree to combine finances in a relationship, you’re also agreeing to a certain degree of cooperation and transparency in your money management,” Ted Beck, president and CEO of NEFE, said in a press release.

This financial game-playing covers a broad field.

  • Purchases: 22% of partners admitted to hiding minor purchases and 7% said they have hidden major expenditures.
  • Income: 6% of partners said they maintain a secret bank account, and 5% reportedly conceal their true annual earnings (which may include salary, bonuses and other employment perks).
  • Debt: 12% reported hiding bank statements and/or bills from a partner, while 8% said they’ve concealed outstanding debts.

Reasons Why Partners Might Lie

While nearly one-third of survey respondents didn’t list their reasons for lying about money, others (45%) reported a partner’s disapproval and embarrassment (25%) as their primary motivations. On the other hand, 32% said they believed their finances should remain private regardless of relationship status.

How Do Lies Affect Personal Credit?

Your credit scores are personal, but that doesn’t mean others can’t damage it. In the case of financial infidelity, joint account activity poses an immediate risk to the factors that determine your score.

  • Payment History (35%): Account statuses, late payments, judgments, liens and bankruptcies are all considered in this category. If your partner has jeopardized joint accounts, it could significantly damage your scores.
  • Credit Utilization (30%): This category measures installment debt (e.g., home or auto loans) and revolving credit balances against your total credit limit. Secret purchases can drive up your ratio and hurt your scores in the process.
  • Credit History (15%): If your partner opens new accounts tied to your name, or closes one of your older credit accounts, your credit scores could take a dip, as this could lower the age of your credit. You can review the accounts currently on your reports by viewing a free copy of your credit reports from the three main credit bureaus — Experian, Equifax and TransUnion — by visiting AnnualCreditReport.com.
  • Inquiries (10%): If your partner is applying for credit accounts with your name attached, you will likely see an inquiry listed on at least one of your credit reports. While this category may not be as impactful as your payment history or other category, too many inquiries in a short period of time can really cause your scores to take a hit.
  • Diversification (10%): Credit health relies on your ability to manage varying types of credit. That said, your partner could hinder your scores if they close joint revolving or installment accounts, especially without your knowledge.

You can see where your credit currently stands by viewing two of your credit scores for free, updated every 14 days, on Credit.com.

What Can You Do?

Financial infidelity can cause serious relationship trouble. According to Beck, it isn’t the severity of financial infidelity that destroys relationships; it’s the deception itself.

“Hiding or lying about small amounts of money can damage a relationship just as effectively as a high-dollar deceit,” he said.

While it’s rough to be lied to, especially about money in your marriage, you may not want to pack your bags just yet. In addition to confessing their lies, 54% of those surveyed resolved to repair things with their partners by taking a few practical steps that you may also be able to implement.

  • Communicate Openly: Honesty is a positive trait in healthy relationships, and it won’t hurt your finances, either. Consider talking to your partner about their reasons for deception and setting expectations for joint finances in the future.
  • Create a Budget: If you and your partner clash on money matters, it may be a good idea to create a household budget that you both agree on. A tangible list of expenses will help you remain accountable and honest as you form new habits.
  • Open Separate Accounts: If you can’t agree on money management, consider maintaining financial independence to limit conflict. If you prefer combined finances, it might be a good idea to create separate bank accounts for shared necessary and miscellaneous expenses. This strategy may help you both adhere to your budget and track spending.

Image: gpointstudio

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.



Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team