So you’ve found the love of your life, gotten married, and lived happily ever after- sounds perfect, right? For most Americans, this story is the dream come true…until it comes time to buy a house and secure a mortgage. Many couples find that, no matter how happy they are together, buying a home can put serious pressure on their relationship – especially if one spouse has poor or no credit. If you and your spouse are at odds due to a credit discrepancy Freedom Debt Relief is here to help! Our experts have uncovered the best tips for couples securing a mortgage when one has poor credit- read on to learn the next steps you should take if that’s you.
Lower your credit utilization rate. Freedom Debt Relief has found that the best way to improve your credit score is to pay off all of your accounts in full each month. However, this strategy takes time to steadily improve a poor credit score, which can be of the essence when you’re looking to invest in a home. While Freedom Debt Relief absolutely urges you to continue paying your accounts on time for the best chance at maintaining a healthy credit score, you should also lower the credit utilization rate of the spouse who has poor credit.
One factor that credit reporting bureaus use to determine your credit score is the percentage of your credit that you use- called your “credit utilization rate.” Using more than 30% of your available credit puts you in the “high utilization rate” category, which is a red flag for lenders, thus leading to a lowered score. Consider transferring your balances onto cards under the account of the spouse with a higher credit score because they have more credibility with lenders (this means that they will be less likely to see a decrease in their score); then, make sure you pay off all your outstanding accounts as quickly as possible.
Build a credit history responsibly. Freedom Debt Relief has found that some Americans believe that the safest route to manage their payments is to forgo credit cards completely and to pay for everything with cash or checks- this is not true in most instances. A lack of credit can be even more problematic than poor credit in some instances, like when it comes to applying for a mortgage, because lenders see those with no credit as a complete gamble- and it takes more time to build a new score than it takes to fix an old one. If your spouse has a fear of credit cards, encourage them to apply for one with the largest line of credit available- then be their accountability partner to help ensure that they use it as little as possible. By charging gas or a coffee every once in a while and paying it down quickly, even new users can see their score build at lightning speed.
Be patient. Like most parts of a marriage, building great credit takes time, effort, compromise, and understanding- it’s not something that will happen overnight. Freedom Debt Relief wants couples to know that, even if they do not qualify for a mortgage right away, all hope is not lost; getting financial assistance, building a budget, and paying off outstanding debts will help your spouse get back on track towards mortgage approval, but you need to understand that this is a process that takes time. By working together as a couple, you’ll get to a combined credit score that will allow you to take out a mortgage eventually- and even if this comes later rather than sooner, you can rest knowing that you did it together.
If you need additional tips for improving your spouse’s credit score, don’t be afraid to ask for help. Money experts from Freedom Debt Relief may be able to get you back on the road towards the mortgage you need faster than on your own.