Getting hitched won’t automatically combine two separate credit reports — yours and your spouse’s — yours is still solely your own and your spouse’s is still solely his or her own. However, they might be combined if you decide to take out a mortgage together.
Joint Mortgage and Marriage
There’s really no set answer to how your spouse’s credit score might impact the mortgage application process since different mortgage lenders utilize different eligibility requirements. If your spouse’s score is 580 and yours is 700, some lenders might base their approval and interest rate on the lowest credit score. Still, others might utilize the score of the spouse who has a higher earning capacity. This means that if your spouse earns $55,000 annually and you earn $80,000, they might use your credit score.
On the other hand, some might collect credit reports of both spouses, determine the median score, and go with the lowest score. This could make a huge difference because only around 3% of home loans are approved for those with a lower credit score, while a higher score increases the chances of getting approved up to 23%, explains a home loan specialist in Tempe.
Fortunately, you could opt to apply for a mortgage on your own, if your credit score is higher than your spouse’s. However, there are some catches. One, you’re not allowed to count the income of your spouse. Second, your joint accounts would add to the debts that are in your name when your lender calculates your DTI or debt to income ratio. Third, your spouse might have to legally renounce his or her ownership interest in the property via a deed before your lender approves the mortgage.
Some Crucial Exceptions
If your reside in a community property state, including Arizona, Wisconsin, California, Louisiana, Texas, Nevada, New Mexico, Washington, and Idaho, the typical rules don’t apply. In these community property states, if you take out a mortgage during your marriage, it will be considered a joint marital debt, which basically means that both of you are equally responsible for the debt, and any record with it, would appear on both your credit reports.