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Your credit score can say a lot about your love life

Happy couple
(Lev Dolgachov / Fotolia)

In preparation for Valentine's Day this year, you may have asked friends to recommend a good florist or checked out online reviews for romantic restaurants. In any event, it probably never occurred to you to seek out central bankers for advice on your love life. But as incredible as it seems, the Federal Reserve Board is worth listening to on that subject.

A new working paper from the Fed examines the link between credit scores and committed relationships, and it turns out there's a strong one. Economists analyzed data from Equifax, the credit reporting agency, on 12 million consumers over more than 15 years. They found that people with higher credit scores are more likely to form committed relationships and then to stay together. For every 93-point increase in a couple's initial average credit score, the likelihood of separation in year two of the relationship fell by 30 percent. After two years, the probability that the couple would call it quits during years three or four dropped 37 percent. Couples in the sample with the lowest initial scores were two or three times more likely to separate than couples with the highest average scores.

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Of course, low credit scores can indicate financial distress, which often leads to relationship distress. But even beyond the financial implications, credit scores seemed to indicate an underlying skill that people bring to life and relationships, says co-author Jane Dokko, now a fellow in economic studies at the Brookings Institution. "That skill might be trustworthiness," says Dokko.

But wait: Researchers also found that people entering into a relationship tend to have similar scores, and that their scores converge over time. But if initial differences exist, they loom large. For example, an initial 66-point difference in scores implies a 24-percent increase in the likelihood of separation during the relationship's second, third or fourth years, and a 12-percent increase in the chance of breaking up in the fifth or sixth year. Raising the higher score -- and thus, the couple's average score -- didn't help. In other words, two people with bad scores might be more compatible over time than people with a big disparity in their scores.

It's vital to be on the same page about finances before your relationship reaches the point of no return. So keep the romance alive by sharing your credit score. And here's more advice for Valentine's Day, courtesy of the Federal Reserve: Don't overspend on flowers, dinner or a gift. Make sure you can pay those bills on time. And spend the evening with someone who can do the same.

Anne Kates Smith is a senior editor to Kiplinger's Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com. And for more on this and similar money topics, visit Kiplinger.com.

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