When Spouses Have Different Credit Scores

Posted on February 28 By MLP Lending Guide

When two people marry, their credit histories are rarely taken into account, and rightly so. Marriage isn't about the financial responsibility of the individuals involved. But when married couples wish to purchase a house and need to take out mortgage, different credit histories can become a problem. Specifically, when one partner has a good credit history and the other poor credit, the process of purchasing a house can be confusing. The couple has several options, and deciding on an option depends essentially on how expensive the intended house is.

One option would be to convince a third party to act as the co-borrower in place of the spouse with bad credit. The third party would have to have better credit than the spouse and preferably a steady income to show as an ability to make payments. However, the only individual that could take the role as the co-borrower would probably be a parent. Another option would be to have the spouse with good credit be the sole borrower on the mortgage, but the downside is that it would only take into account the income of the spouse with good credit, thus limiting the amount of the loan.

To get around this, the spouse with good credit could get a mortgage that doesn't require income verification, so the mortgage would be calculated without taking income into account. However, with loans of this type a large down payment is usually required, so be sure you could handle that sort of financial burden all at once when picking this option.

Perhaps the worst option would be for the couple to take out the loan together as co-owners and co-borrowers. This would result in a loan that is affected by the bad credit of one of the spouses, meaning a high interest rate. It is possible for one spouse to be a co-owner of the house and not a co-borrower. Make sure you examine all possibilities and determine which is right for your current financial situation.

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