There are some situations where your spouse’s credit scores will affect your rates & terms on loans. In some scenarios a spouses bad credit score could affect you getting a loan period. This means you cannot always hide your partners past or current credit issues.
Let’s assume you just got married. A house purchase is on the table. Well depending on your circumstances most will apply for a mortgage jointly. This means that both of you will have your credit report and credit scores pulled. All banks will look at the lowest credit score to determine the approval along with the overall credit picture. So if you have a low credit score and bad credit history your loan just went down to China Town…..
Some mortgage loan types such as FHA and VA require that both spouses have their credit reports pulled. Government loans look at both parties debts. That is why they require both credit reports to be pulled. In some cases where you need both incomes to qualify a bad credit score will cause qualifying issues or even a denial. Take note government loans during some circumstances will only look at your debt if your income is not being used for the loan. This is called a non-qualifying spouse scenario. This type of loan is where one spouse’s income is being used for qualifying, but both parties’ debts are used in this process.
The first thing creditors look at is your credit score. A low credit score will cause higher rates and terms for both spouses even though one spouse may have a 740 credit score. This is where matters get tricky while applying for loans.
So if you thought you could hide those bad credit scores and ride the coat tail of your spouse, think again… A spouse’s bad credit will catch up with you one way or the other and will ultimately cost you unnecessary money.
You are better off taking care of any credit issues on your credit report yourself. You can use our “Do it yourself credit repair guide”, to avoid costly and unnecessary credit repair companies.
If you know you have credit issues and are concerned it might affect you and your spouse, get busy right away…..the clock is ticking…
Mike Clover
CreditScoreQuick.com
