How to Stop Your Spouse’s Credit Score From Sabotaging Your Mortgage

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Buying a house is a major milestone for married couples.

But this dream can be derailed if one spouse  has a bad credit score.

Freedom Debt Relief has 6 tips couples can follow to get a mortgage for their dream home even if one spouse doesn’t have the best credits core.


1. Pull copies of all three credit reports for each spouse


You have credit reports with three major credit bureaus – Equifax, Experian, and TransUnion.

When you apply for a mortgage, the lender will likely pull credit scores for all three credit bureaus. This is why you should check all three credit reports.

Much of the information will be the same between the credit reports, but there may be some differences between the credit reports. Check your credit reports for errors and other information that could keep you from getting approved.


2. Clear up credit report errors


A study done by the Federal Trade Commission found that 20% of credit reports have errors in them.

Some of these errors are bad enough to hurt your credit score and can stop you from getting  the best mortgage rate. In some cases, errors can keep you from getting approved at all.

Freedom Debt Relief recommends both spouses check their credit reports for errors. If there are any errors on either credit report, dispute those errors with the credit bureaus.

The credit bureau will investigate the dispute then update the credit files based on the results of the investigation.


3. Pay down your credit card balances


One thing that affects your credit score is the amount of credit you’re using.

Your credit utilization ratio measures the ratio between your credit card balance and your credit limit.

The more of your balance you use, the worse your credit score.

According to Freedom Debt Relief paying your balances down to below 30% of your credit limit can help boost your credit score in advance of your mortgage application.


4. Work on your spouse’s credit


If one spouse’s credit needs work, spend some time working on that spouse’s credit in the months leading up to the mortgage application.

Disputing credit report errors and lowering credit card balances is a good start.

List out all the negative accounts and work on them one by one.


5. Pay off the right debts


Paying off debts will help you get approved.

But you want to be sure you’re paying the right debts. If there’s an old debt that will fall before you apply for the mortgage, that’s not the best one to pay off. Instead, pay off collections and charge-offs that are more recent.


6. Get the mortgage in one spouse’s name


If there’s not enough time to repair a spouse’s credit report before you’re ready to apply for the mortgage, you could apply for the mortgage in just one spouse’s name.

The disadvantage in doing this is that the mortgage lender may limit you to using one spouse's income for the mortgage application, which could limit the amount you’re able to borrow.

If one-half of a married couple doesn’t have the credit profile to qualify for a mortgage, that doesn’t mean your house hunt has to go on hold indefinitely.

Both spouses can work to improve their credit profiles as much as possible before the mortgage application, which will improve your chances of getting approved with a good interest rate.