Spouse Have Bad Credit? Tips For Securing Your Home Mortgage

If you and your spouse are looking into purchasing a home, you may find yourself running into a difficult situation when securing a mortgage. If you both plan on having your names on the mortgage, both of your credit scores will be taken into consideration. Your credit score may be great, but a spouse with a bad credit score will also factor into your approval. Here are some tips for what you can do about this unique problem.

Fix Their Credit

The first thing you should do is find ways to fix your spouse's credit. This can be done by pulling the report and seeing what is causing the score to be so low. You should attempt to fix anything that you know you can deal with short term. This includes paying off regular credit cards that have an outstanding balance on them and lowering overall credit utilization.

Larger debt, like student loans or medical bills, should be paid off over time, so it's important that you actively work towards paying down that debt. You won't see immediate changes overnight from these changes, but it can help down the road if you know you want to get a mortgage together.

Avoid Any Negative Credit Behavior

A common mistake people make when looking to purchase a home is to open new lines of credit in preparation for those purchases. Do not do this, since it will only hurt your credit score. Applying for a line of credit not only causes your credit score to take a slight hit, but it will show up as an inquiry when your mortgage lender looks at it.

It will also be best to keep your credit cards separate from your spouse so that it does not impact your credit. This can be accidentally done by adding a spouse to your own credit card. You'll think you're doing a good thing by allowing them to benefit from your low balance and regular payments, but it immediately makes the card a joint account that will bring along their low credit score.

Get The Mortgage On Your Own

Of course, you can always decide to get a mortgage without your spouse's name on it. Having a single income can limit how much money the bank will let you borrow, but it's possible to still make it work with your budget when you look at your total household income. Any low loan amount can be offset by offering a bigger down payment to get the remaining principal within the range of the loan.

Contact a mortgage lender to learn more about mortgage loans.

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