The early days of marriage are usually blissful and carefree. Credit repair is the last thing on your mind. While the rose-colored glasses are fun and difficult to retire, the time to avoid financial blunders is now. Avoid some of the most common newlywed mistakes, including:
1. No budget. It can be tough to come home from post-wedding and honeymoon fun. However, establishing a budget early may save you from credit repair worries later. If you are just moving in together, now is the time to sit down and decide how you want to handle the household expenses. For example, how much will you spend on food each month? Do you need to cut back on the extras to save for a larger home? If you lived together before marriage, consider how your new life will affect your old budget. Will your insurance premiums go up? Did you suddenly inherit your spouse’s debt? Working together to solve these issues will likely safeguard your credit score—ignoring them may guarantee the need for credit repair.
2. Separate finances. Melding finances can be a touchy subject for even the most loving couple. Blending bank accounts and sharing expenses can be nerve-wracking, especially if both spouses possess an independent nature. In this scenario, it may be best to let go of your single-minded former self. Establishing a household budget is nearly impossible without all the cards on the table, making it difficult to estimate short-term spending and invest in long-term goals. Protect your credit scores by allowing one another access to the full force of your combined incomes.
3. Uneven responsibilities. Marriage is a partnership, but some spouses find it easier to divvy up the responsibilities. Allowing your financially-minded spouse to handle the bills and budgeting may be time-effective, but is it smart? Keep one another in the loop when it comes to household expenses and how to manage them. If your spouse is sick or out of town, will you know how to pay the mortgage? If a creditor calls about a joint account, will you know what he is talking about? While you may never need to step in and manage the finances yourself, it is important to prepare for unforeseen events.
4. No emergency fund. Speaking of unforeseen events, an emergency fund can mean the difference between shining credit scores and credit repair disaster. You may be thinking, “We’re newlyweds, what could go wrong?” In reality, accidents are never convenient. Commit to saving at least 10 percent of your combined incomes each month. You never know when you’ll need a safety net.
5. Dragging debt into the picture. Achieving the American Dream is a tempting prospect. Once you have the perfect marriage, you may feel the urge to buy the perfect house, car, etc. to go with it. Think twice before upping the ante of your newlywed bliss. Taking on more debt than you can afford may have a lasting negative effect on your credit scores by increasing your debt utilization ratio—the amount you owe vs. your total credit limits. And, like dominos, those resultant negative credit scores could then affect your ability to secure loans with affordable interest rates. The bottom line: as with choosing a spouse, smart financial decisions require careful consideration. Take it slow.