Is it possible for me to secure a home mortgage even if my partner has a bad credit score? Most people find themselves in a dilemma when they plan to buy a house by combining their income with their partner, only to realize that their partner has a poor credit rating. One individual may be financially stable in that they foot the bills and work even harder to ensure they accumulate more income, so they are comfortable and able to save.
However, this may not be the case with your better half whose financial situation may not be worse off, but their credit score is not appealing at all. The poor credit rating of your partner may be attributed to past financial mistakes which they could be working hard to rectify. Given this scenario, there are a few options that are available to both you and your partner that would enable you to fulfill your life-long dream of buying a house together.
Comprehending your Partner's Poor Credit Score
It is advisable to do a background check to understand why your partner has a low credit score before rushing to engage a lender to finance your intended plan of home ownership. Given that buying a home is no easy task, it is prudent to hold off on this decision if your partner has a poor credit rating.
It is not a good idea to approach a lender if your partner is under a financial strain of buying a house can always wait until your partner is stable and on their financial feet again. Your partner may be having a bad credit rating due to past financial mistakes that have caught up to them.
If this is the case, the best thing to do is for the two of you is to work for some time to improve their credit rating before embarking on securing a home loan. This entails having a concrete debt repayment plan in place so that the partner's credit score can improve. Other options for improving the partner's credit rating include regularly checking their credit reports to identify and rectify errors, if any; making timely payments on debt installments and in full; maintaining a low credit utilization ratio; and finally, leaving the old accounts open but without actively using them.
Straight Up And Buy The Mortgage
Another option of buying a house when your partner has a poor credit rating is by taking the bold move to purchasing the house entirely on your own. This is because it is more sensible to purchase the house you want on your own instead of doing it jointly with your partner who has a poor credit rating.
This has to be done after considering that the mortgage lender will scrutinize all your finances that range from your monthly salary, your creditworthiness, and your assets to assess and whether you can meet the monthly installments without any additional help from other monetary sources. Going down this route requires you evaluate yourself to determine whether your income alone will suffice to foot the monthly payments and other costs related to the home you want to buy.
Explaining Your Situation
There is also the option of penning a letter to your prospective lender to explain how one of you is financially stable and with a better credit rating than the other. This heavily relies on the understanding of the lender, and it also means that the poor credit rating of your partner will not affect the monthly repayments required to sustain the mortgage on the house.
Find a Co-signer
The last resort, although a risky one, would be finding a co-signer who will help you get the funds to finance your purchasing plan. This is where you ask someone to co-sign the mortgage with you if your partner's credit rating is far from good. The co-signer should be another person with adequate income and a good credit score.
The downside with this option is that your co-signer will bear all the financial responsibility in case you default on the repayments. It goes without saying, however, that this should be your last resort after you have pursued all the other options and failed to secure the home loan that you want.