There are plenty of good reasons to buy a home these days. If you're still working remotely, you may have a more flexible job schedule, which will make it easier to scope out homes and deal with your mortgage application. Given that mortgage rates have climbed and home prices remain high, buying a home today is often a challenge.
But what if you're applying for a mortgage jointly with a spouse, and their credit score could use some work? Will you qualify for a mortgage if your credit score is strong, but your spouse's isn't?
Jump To
- When your spouse's credit score needs work
- Should you apply for a mortgage solo if your spouse has bad credit?
- How to help your spouse's credit improve
- Still have questions?
- FAQs
When your spouse's credit score needs work
You might assume that if your credit score is great, but your spouse's isn't, mortgage lenders will just average your two scores and go with that number. But that's not really how it works.
Your strong credit could help compensate for a spouse's poor credit to some degree. But ultimately, lenders will fixate on the lower of the two scores if you're applying for a mortgage jointly.
Lenders often pull credit scores for both applicants from each of the three major bureaus. Then they use the "lower middle score."
Suppose your three credit scores are 787, 790, and 802. Your middle score is 790. Your spouse's credit scores are 608, 620, and 627.
Many lenders would base your mortgage eligibility on the lower middle score -- your partner's 620.
A 790 is an excellent credit score. But a 620 is usually the minimum credit score required for a mortgage, so in this scenario, you might get approved for a home loan without the most competitive interest rate on it.
On the other hand, if your score is a 790 but your spouse has a 540, that low score could potentially ruin your chances of getting approved for a mortgage, despite your great credit.
Should you apply for a mortgage solo if your spouse has bad credit?
When there's a huge gap between your (strong) credit score and your spouse's, one solution could be to apply for a mortgage on your own rather than apply jointly with your spouse. This will only work, though, if you earn enough money to cover your housing costs on your own.
In addition to credit scores, lenders will look at your income to see if it's high enough to qualify for the loan you're seeking. If your income isn't high enough to snag that mortgage, and you need your spouse's income factored into the equation, then you'll have to apply for that loan jointly. That's when your spouse's poor credit could be an issue.
Unfortunately, you can't have it both ways. You can't count your spouse's income on your application, but not their credit score.
How to help your spouse's credit improve
If you have a spouse whose credit needs work, it could pay to bring that number up and then apply for a home loan. First, have your spouse get a copy of their credit report to see what it looks like. If there are errors on that report that work against your spouse, correcting them could boost their score quickly.
Next, see why your spouse's score is so low. Is it because of a late payment history? Too much credit card debt? If there are delinquencies on your spouse's credit record, it could help to get current on those payments, and then pay on time from that point onward. Similarly, paying off a large chunk of existing debt could help your spouse's score improve.
In many cases, applying for a mortgage along with a spouse puts you at an advantage -- namely, you'll have two sets of income to present to lenders. But the flipside is that you'll both need good credit to snag an affordable mortgage rate. If your spouse's credit score is poor, it could prove problematic. Figure out a backup plan, whether it's applying for a mortgage on your own or taking steps to bring your spouse's score up quickly before submitting your application.
Still have questions?
Here are some other questions we've answered:
- What Is a Joint Mortgage?
- What Credit Score Do I Need for a Mortgage?
- How to Save for a House: 5 Steps to Preparing for Homeownership
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If you want to uncover more about the best mortgage lenders for low rates and fees, our experts have created a shortlist of the top mortgage companies. Some of our experts have even used these lenders themselves to cut their costs.
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FAQs
If you're applying for a joint mortgage, lenders will consider both of your credit scores. Many will pull scores for both spouses from each of the three credit bureaus and use the middle score for the spouse with the lower scores. If only one spouse applies for the mortgage, only their credit scores will be considered.
No. Your credit score is based on your individual credit history, not your spouse's. However, if you jointly apply for a mortgage or another type of loan, both of your credit scores will be considered.
Paying off a large amount of credit card debt helps you increase your score quickly because you lower your credit utilization ratio, or the overall amount of credit you're using. Paying off a loan has less impact because it doesn't affect credit utilization. Making on-time payments for credit cards and loans will help your score, but the impact is gradual. If you don't have open credit and can't get approved for a credit card, applying for a secured credit card can also help.
