It’s not uncommon for married or unmarried couples to have different credit scores. If the difference is just ten or twenty points, it’s unlikely to affect you when buying a home.
But what happens if your credit score is a sparkly 760 and your significant other has a credit score of 620, for example? This is where problems can arise when it’s time to obtain a mortgage and lock in an interest rate.
Unfortunately, the lower of the two credit scores is the one that’s utilized when determining loan eligibility and interest rates. As long as both scores are above 620 or so, you’re likely to qualify for an FHA mortgage. However, the lower partner’s credit score could drive up the interest rate – potentially costing you in the hundreds on each month’s payment.
Sometimes, homebuyers decide that it makes the most sense for only one partner’s name to be on the mortgage. This is especially true if the partner with the lower score can’t easily qualify for a loan, or the interest rate implications are so severe that buying a home becomes more difficult. However, in this situation, it’s important to note that only the higher partner’s financial information may be utilized; in other words, only one income may be used, and only their bank statements and assets may be used to qualify.
If you’re unsure where your credit score stands, consider checking out a reputable online credit score company and speak with your lender for individualized assistance. There may be ways to easily increase your credit score in one month or less!