As human beings we’re not perfect. It could happen that some of us end up with a bad credit score and things start to tumble. I know I was there, but luckily I had a supportive partner who helped me overcome these challenges.
And that could be crucial for some people, to have someone to support them on this rough ride. The two of you are in this together, after all. There are some limits, as you are about to find out… Here are 6 things you could do to help your partner rebuild his/her credit score:
1. Help your partner review their credit report
If your partner has bad credit score, it is likely that they don’t know how to pull their credit report and what to do about it once they have it. You’ll want to explain them how to get the credit report and go through it item by item. What you are looking for are potential errors that could be reported to appropriate authorities to have them removed or updated.
Flagging and reporting credit errors is the first step in getting the situation back under control. Once that part is done, even if there are no errors to report, you are ready to continue.
2. Provide support and positive reinforcement
The idea is not to simply bail out someone else, but to help him/her get finances in order. Sure, you may have to do something tangible, but throwing money at a problem seldom works in the long run. Chances are this is a behavioural issue that must be addressed on multiple levels.
In other words, while you can help, they should be the one to work their way out of this situation. See if you can help them in other areas, like navigating their credit report and preparing their monthly budget. They’ll thank you afterwards.
3. Establish a cash allowance for both of you
You can’t just take your partner’s credit card and through it away. Instead, establish a cash allowance for both of you and stick to it. Yes, this entails creating a budget and perhaps even deciding to drop spending on credit cards altogether. Cash is king in many areas and when it comes to spending, it makes it harder to buy things left and right. There’s a difference between pulling out paper instead of plastic from your wallet — unlike plastic (credit card), the paper disappears over time.
The important thing for your partner to realize is that both of you are in this together. This way they will be more willing to comply.
4. Find room for savings
Your partner’s debt is partly your debt, too. So act like you would if it was your debt — as we have discussed in other articles, the idea is to find room for savings so you could repay that debt as soon as possible. And that’s where the budget kicks in; you need to know where your partner’s money goes before deciding where to make the (necessary) cuts.
To that end, the two of you could brainstorm actionable ways to solve the current situation. Sit down together and come up with ideas how to reach that goal.
Perhaps your partner could ask for a raise at work, or perhaps he/she could get a part-time job or a side gig. Ultimately though, he/she will need to cut on spending to reach the previously set goals.
5. Schedule autopays
Tell your partner, or help him/her, to set up auto-payments towards debt repayment. The idea is to select the dates that coincide with their paydays so that they have little time to go on a shopping spree. They should first handle their financial responsibilities, and only if there is something left — buy something for themselves.
Actually, the goal should be to put more money into savings to remove the debt as soon as possible, but that’s not always possible. People are people, if you know what I mean.
6. Consider other financial instruments
One of them could be a low APR loan that would be used to repay the higher APR debt from a credit card. There are also balance transfer credit cards, but those with more than 12 months of zero interest financing are usually unavailable to people with poor credit.
In the meantime, the two of you may want to consider a secured credit card. It seldom offers any bells and whistles, but it will help them recover their credit score, while at the same time putting their (bad) shopping habits under control.
A secured credit card entails the user placing a deposit that is typically the same size as the credit limit, pretty much making it a risk-free product for the bank. So yes, a bank will offer this card to just about anyone.