In Good Credit and Bad Credit
House Hunting with a Partner’s Challenging Credit Score

What happens when you’ve met the right person, with the wrong credit score? It may seem to be a deal-killer, at least to lenders - but there are options. Here’s how others have tackled this situation together!

Myrlin Hermes and her boyfriend, Jeremy Capps, knew the kind of house they wanted to buy in Portland, Ore., and had an idea of how much home they could afford. Myrlin, a novelist, has an excellent credit score of 765. Jeremy earns a solid living as a network engineer for Intel. Their mortgage prospects looked bright.

Or so they thought.

Despite Jeremy’s steady income, his credit score came up as “not available.” According to Myrlin, he had no credit cards, and had never bought a car on payments. In other words, there was nothing to assure lenders that Jeremy was creditworthy. “We thought living within your means was supposed to be a good thing, but now we're stuck renting for another year or two, at least while he tries to build up a credit history from scratch.”

It’s a common scenario for many couples today. One has stellar credit, the other has no credit or, worse, poor credit, throwing home plans into disarray.

Balancing Acts
Couples can combine bank accounts and assets, but they can’t combine credit scores. Each goes into the partnership with an individual credit history.Many couples become disheartened, thinking they’ve got few good options. But the news is encouraging. Even if your better half has a questionable financial record, there are strategies for keeping the home-buying dream intact.

The most important thing? Don’t be blindsided. Know your creditworthiness before you begin the process. Find out what your credit rating is and if there are any challenges.

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Establish a Game Plan
By finding out your credit score and consulting with a mortgage professional early on in the process, you can explore options for establishing a credit history.

In an era of credit tightening, individuals who simply have no credit history are considered mortgage risks. Those who haven’t used credit cards or taken on, say, car or school loans have not yet proven to lenders they can manage credit responsibly. That’s typically a situation that can be remedied in a relatively short period of time, as few as a couple of months. Sometimes a mortgage professional can even help prove an applicant’s worthiness by providing a lender or underwriter with an alternative means of credit history such as a cell phone, cable, car insurance or utility bills.

Going it Alone
A partner with good credit can go it alone as long as the single salary is sufficient to support the mortgage.

Another option? Find a co-signer, such as a close family member, who will agree to guarantee the loan in the case of a default. The co-signer is liable for repayment until the loan is satisfied, which means it’s not a commitment to be taken lightly.

The important thing to keep in mind is it’s not always necessary to postpone your dream. “People get discouraged because they’re not informed and they give up. There are definitely options!"