The Beatles sang that "Money can’t buy me love,” but recent research paints a slightly different picture. It turns out, if you’re a savvy manager of your cash (even if there's not a lot of it), you might be better positioned for success in love.
Do you know your credit score? Do you know your significant other’s? It’s not the kind of information that people share on a first date, and even long-term couples may be blissfully unaware of each other's true financial situation. Nonetheless, new data suggests that financial credit scores may actually be an important part of the story if you're trying to understand a relationship's lasting potential.
A team of researchers (Dokko, Li, & Hayes, 2015) bridged romance and economics by analyzing data from a major consumer credit reporting agency, the Federal Reserve Bank of NYC Consumer Credit Panel/Equifax (CCP). They focused on quarterly information between 1999 and 2014, the data of which represent about 12 million Americans with valid credit histories per quarter. Forming the basis for their investigation were Equifax “risk” scores, similar to FICO scores, and observed cohabitating patterns based on street addresses. The authors generated an algorithm to differentiate between people who moved in together (or moved out) as likely romantic partners versus situations such as roommates or adult children moving back home. After validating their algorithm, they turned to their central analyses.
If you’re single, but your credit score is high, you’re more likely to form a committed romantic relationship in the next year relative to comparable others (Dokko et al., 2015). In fact, analyses reveal that individuals whose credit scores are 109 points higher than average are 14% more likely to form a relationship than lower-credit counterparts.
Next up: Who pairs off with whom? It turns out that, without any real conscious awareness, individuals are self-sorting based on, yes, their credit scores. Few of us list "similar credit score” on our lists of qualities we dream of for our partners, but the patterns these researchers observed show a clear trend: Individuals tend to match with others who share a similar credit story—and this is particularly true if you have really good or really bad credit; the match between those with middle-level credit is less perfect.
Even if couples have similar scores, their scores are unlikely to be exactly the same. And the further apart they are, the worse the prognosis for the relationship (Dokko et al., 2015). A 66-point difference greater than average amounts to a 24% greater likelihood of relationship dissolution during its first few years. Why is this? It may just be that negotiating finances becomes particularly challenging when two people have very different habits of saving, spending, and managing debt.
Over time, however, within-couple differences in credit scores tend to narrow (Dokko et al., 2015). Probably because they’re making shared financial decisions, couples tend to become more similar in their credit scores. Interestingly, though, the partner who had the highest credit score at the start of the relationship may not be the one who has the highest score later on. It’s not uncommon, as shown by the team's data, to have the higher-credit person in a relationship flip.
But that’s not all: Improving your credit risk predicts relationship stability (Dokko et al., 2015). People whose credit scores increase by 93 points from their initial meeting through the second year of their relationship are 30% less likely to split up. And if they make it past the second year, a 93-point increase from the initial credit score suggests a 37% reduced likelihood of relationship dissolution in the third or fourth year. Basically, moving your credit score in the right direction seems to coincide with moving your relationship along a path towards stability.
Unfortunately, those couples who start out with the lowest average credit scores are at particularly high risk of relationship dissolution: They’re two-to-three times more likely to break up than couples who have established better credit.
What’s really happening here?
The authors assert their results "point to a quantitatively large and significant role for credit scores in the formation and dissolution of committed relationship.” But are credit scores really the driving force behind relationship health and stability?
Instead, our scores may correspond with factors that directly contribute to relationship health and happiness. The authors, for example, analyzed scores on a trustworthiness measure and discovered that credit scores and trust go hand-in-hand (Dokko et al., 2015). And we know that trust is an active player in relationship happiness.
It seems, then, that credit scores are indicators of more than just money management. They may tell us something about a person’s trustworthiness, of course, but potentially other underlying attitudes and values as well: Risk-aversion, conscientiousness, dependability—a variety of traits may be part of the backbone of good credit. In addition, the privilege of financial security may enable couples to enjoy less financial distress and worry, which can erode away at relationship well-being.
These findings are based on averages, so there are certainly exceptions: Some individuals with poor credit scores for whatever reason could be highly committed partners, while others with excellent credit might not be trustworthy in romantic relationships.
Still, the overall trend is compelling, and if nothing else, this research could be motivation for you to check your own credit score.
Dokko, J., Li, G., & Hayes, J. (2015). Credit scores and committed relationships. FEDS Working Paper No. 2015-081 http://dx.doi.org/10.17016/FEDS.2015.081