First-Time Buyers:
Whose Credit Score Is Used on a Joint Mortgage?
If you are purchasing a home with another person, but aren’t sure whose credit score is used for the mortgage – you are in the right place.
It’s an important question during the financing process, especially if one person has a significantly lower score than the other. This blog shows how lenders calculate the credit score that will be used on the loan.
*Disclaimer: I am NOT a credit repair specialist or a mortgage lender. These are tips that I have learned while working with my buyer clients.
The Hard Credit check
When buying a home, lenders will have to complete a “hard” credit check before offering an official pre-approval. This hard pull does temporarily lower your score by approximately ~7 points, but it is necessary so that you don’t have any surprises after you have an offer accepted.
Your credit score can make a big difference when financing a home loan. Most importantly, it impacts the interest rate which impacts your overall monthly payment.
The credit bureaus
Lenders will start by pulling both your and your partner’s credit scores from the three major credit bureaus, which are:
- Experian
- TransUnion
- Equifax
The lender will find the middle of each of the scores and then choose the lower middle of the scores to determine the score used on the loan.
For example: if your scores were 658, 672, and 667. The middle of these scores would 667. Then lets say your partners scores are 760, 742, and 753. The middle of these scores would be 753.
The lender will take the lower of these two middle scores, so it would be your middle score of 667 for the loan.
Tips to increase your credit score
Now that you know how the score is calculated when buying as a couple, you may be wondering how to enhance that score.
- Experian Boost– this program connects to your bank to track your timeliness in paying bills. The program is free and can make a significant difference if your credit score is right on the brink between the lenders threshold for the rates. Obviously if you are frequently late on your bills this program wont help and you are going to want to consult with a credit repair specialist.
- Another hack to increase your score quickly is to call to increase your credit limit on your cards. Your revolving credit usage makes an impact on your score, so if your total limit increases, the percentage you have revolving will decrease. However, DO NOT add more debt to these cards. We want the revolving usage to go down, not up.
not ready for a hard check quite yet?
That’s ok! A local lender will be happy to help review initial financing options with you and offer a soft-credit check. This gives you a good starting point when you are just starting the home buying process.
Please note, you will still need a true credit check in order to receive a pre-approval from a lender.
Just a reminder I’m not a lender or a credit repair specialist. This is high level information learned from lenders while working with my clients during the buying process. If you need more in depth information from the financing side, send me an email and I will be happy to introduce you to a couple of trusted local professionals here in the Twin Cities.
Looking for more information? I have several videos that detail the buying process on my YouTube channel. Feel free to watch a couple and reach out if you have any questions!
