Are you depending on Hallmark to help you express your love
to that special man or woman in your life this Valentine’s Day? Would you consider instead taking some clues,
maybe borrowing some romantic language for the occasion, from a paper published
as part of the Federal Reserve Bank’s Finance and Economic Discussion Series?
No? I can’t imagine
why not. Doesn’t the title of the paper,
“Credit Scores and Committed Relationships”, just warm your heart?
Seriously, I have to wonder why our tax dollars funded the
research and underwrote the bureaucrats who produced the resulting paper. But in the spirit of the holiday, I’m going
to overlook that and—why not?—take advantage of what they learned and use it
for this week’s post.
As the title implies, the study looked at a select group of
Americans—twelve million of them, from the database of the credit bureau
Equifax—to seek possible links between their credit scores (such as the
familiar FICO score you might see on your credit card statement or that a
lender will use to rate you as a credit risk) and their marital or other
relationships. Here’s what they found.
People with higher credit scores
are more likely to form committed relationships, including marriage, and then
stay in them.
A corollary to that, perhaps, is
the finding that for every 100 additional points of a couple’s average credit
score, the likelihood of their staying together for a second year and beyond
goes up by as much as 30%.
But it’s not just high scores that
can make for a long-term relationship.
Having very similar credit scores, high or low, also proved to be a good
predictor as to whether a couple remained together. The closer the two scores, the better the
odds; the farther apart they were, the less likely the relationship would last.
The credit scores of two people in
long-term relationship tend to converge over time.
All of these findings were true even after controlling for
such other factors as educational level, employment, race, etc.
Should any of this really surprise us? I don’t know if Match.com asks its enrollees
about their credit scores, but doesn’t it make perfect sense that someone who
is willing to put in the hard work to maintain a good credit score would have
the character traits necessary to put in the hard work to maintain a
marriage? (I’m sorry, I know it’s
Valentine’s Day, all hearts and roses and chocolate candy, but relationships do
take a fair amount of patience and work.)
And when a couple joins their fortunes in marriage and works together on
the decision-making and financial management of daily living, wouldn’t you
expect their credit scores to come to be very similar over time? They help or hurt each other’s score.
No, nothing really surprising here when you stop to think
about it. But if you are dating now or
expect to be at some point, carefully consider this. We tend to put on our best face in the dating
game. Get beyond that to learn more
about your potential mate. Have a
financial discussion; and even if you don’t look at each other’s credit score
while dating (I highly recommend it before marrying, though), you should watch
his/her actions carefully for clues as to their financial responsibility. As one economist commented on the Federal
Reserve’s study, credit scores indicate “a general trustworthiness and
commitment in non-debt obligations.”
If it just doesn’t have the right romantic ring for you to
tell your sweetheart that you feel a strong commitment to her in a non-debt
obligation kind of way, maybe this week’s Bible quote would be more
appropriate.
Happy Valentine’s Day.
Roger
“Always keep me in
your heart and wear this bracelet to remember me by. The passion of love bursting into flame is
more powerful than death, stronger than the grave. Love cannot be drowned by oceans or floods;
it cannot be bought, no matter what is offered.” Song of Songs 8:6-7 CEV
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