It’s the month of love, a time when some couples will decide to tie the knot. By the time you reach this point in a relationship, you know your partner’s beliefs, strengths and weaknesses. But how well do you know his or her money habits?
How much debt does your partner have? Are they diligent about servicing debt? Or are they in debt counselling? Do they max out their credit cards every month?
As unromantic as they may be, these are important questions to ask. “Many couples avoid this topic completely until they are in a marriage. Some believe this is a topic for married people only, while others don’t have the courage to start the conversation,” Nicky Lala-Mohan, the Credit Ombud, says.
In some cultures, when a man asks for a woman’s hand in marriage “lobola” comes into play. This is an age-old tradition where a man pays the family of his fiancée for her hand in marriage.
“Some [men ] will save up for the lobola, while others might apply for a personal loan or use their credit cards,” Lala-Mohan says.
Whenever a person is granted a personal loan or has a credit card or any form of credit agreement, this information is recorded by credit bureaus in the form of a credit report. All South African consumers have the right to ask for a free credit report from each of the registered credit bureaus once every 12 months. However, fewer than one percent of all credit-active consumers exercise this right, the credit ombud says.
“It’s as if consumers would rather not know what’s on their credit report. This is a culture that we need to change. There is nothing to be afraid of. Asking for your credit report will not make things worse – in fact the opposite is true.”
The sad reality is that it’s only after saying “I do” that many people discover that their partner has “issues” such as a poor credit score or a record of bad payment behaviour.
Depending on the type of marriage contract that you enter into with your partner, you could be saying “I do” to his or her debt too, which can frustrate the process of big purchases, such as a home or a motor vehicle, or whatever the newlyweds need to obtain on credit.
What to expect from a credit report
Many people think of a credit report as a record of negative information only. But this is not true. Credit bureaus keep both positive information and negative information pertaining to your accounts. When you open an account, the information is sent to the credit bureaus and is reported in the form of a credit report. Your credit report includes information such as account balances, amount of the monthly installments, how you are paying these accounts monthly and if any accounts are overdue or unpaid. Each month that you make a payment, skip a payment, pay late or short pay, the information is reported on your credit report.
A credit report will reveal over-indebtedness and bad financial habits, both of which have the potential to choke a marriage to death, the ombud says.
Lala-Mohan says couples should be brave enough to share their credit reports with their partner so that both know what debt the other is bringing into the marriage.
The benefit of checking your partner’s credit report regularly is that it introduces accountability for both partners, particularly if one has a weakness for credit. Credit reports reflect the consumer’s account application history – known as the enquiry history – which is a list of applications for credit made in the past 12 months.
Credit reports also provide details of adverse listings, and if there was action taken against debt that was not honored. So, if your partner gets into trouble with a creditor, you will be made aware of it and can help him or her deal with it.
By regularly checking your and your partner’s credit reports, you are able to pick up irregularities – such as debt that you never applied for – which is usually indicative of identity theft.
Consumers can contact the office of the Credit Ombud for free assistance if they experience any issues relating to credit agreements with non-bank credit providers, such as the clothing and furniture retailers, as well as micro-lenders. The ombud’s office will also help you address any fraudulent listings, issues with emoluments attachment orders (“garnishee orders”) or general complaints about a credit bureau listing.