How Credit Scores Complicate Love

Sometimes a credit score is more than a number. It might tell us if a relationship will last.

What a High Credit Score Really Means

Looking at 15 years of data from 12 million consumers, NY Fed researchers hypothesized why couples stick together. When two adults co-habit (as partners or spouses), they are more likely to form a long lasting tie if their credit scores are both high. Because getting a mortgage or an auto loan will be easier, the hassles that divide couples are minimized. Even smaller credit related commitments like cell phone contracts will not loom as large. Consequently, pairs who both have better credit tend to stay together.

By contrast, when cohabiting adults have different or low credit scores, the financial stress accelerates. Divergent scores mean the higher one is dragged down by the lower number or the person with better credit has to acquire the loan. When both have poor credit, everyday life has extra tension. According to the statistics, more of these couples separate.

Interestingly, the Fed’s researchers suggest that a high credit score reflects more trustworthiness. As a result, your interpersonal connections will be more successful. And that returns us to the connection between enduring relationships and good credit.

Credit Scores and Consumption Complementarities

We can also say that matching credit scores are consumption complementarities.

But first let’s look back to when the husband used to bring home the bacon and the wife cooked it. Or, as an economist might say, the traditional family has a market specialist and a domestic specialist. Rather like a factory, household output includes children, meals, and clean dishes.

Contemporary couples no longer require market and domestic specialists. With day care, take-out and dishwashers, and both partners earning income and both (or none) cooking, we have a new economic unit. Consequently, marriages and domestic pairs are about companionship more than children. Instead of production complementarities, they have consumption complementarities.

And yes, the same education, religion, and credit card scores can become consumption complementarities.

Our Bottom Line: Assortative mating

Called assortative mating, couples with similar attributes tend to form pairs.

So you can see that it all fits together. People with consumption complementarities that include close credit scores form longer lasting relationships through assortative mating.

Sounds complicated?  xkcd thought so too:

My sources and more: Always fun to read, Justin Wolfers and Betsey Stevenson (long-term committed relationship) have written about changing complementarities. Less exciting but fascinating, this NY Fed paper on credit card scores was enlightening. After publication this econlife entry was slightly edited.

(In this post I combined sections of previous econlife entries.)