Don’t Apply For A Mortgage With Your Partner If One Of You Has A Much Lower Credit Score

Don’t Apply For A Mortgage With Your Partner If One Of You Has A Much Lower Credit Score
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Depending on your credit scores, applying for a mortgage without your spouse or partner could save you a ton of money.

Photo by TheTruthAbout.

If you have an excellent credit score but your partner’s score is much lower, the lender will likely charge you a higher interest rate, based on your partner’s score. Not all lenders follow this rule (when I applied for a mortgage with my husband, they took the average of our scores), but it’s something to watch out for. In Australia, credit card companies, credit reporting agencies, banks and lenders use various methods to calculate a credit score for a person that is used to determine how financially responsible they are.

According to mortgage broker Mint Equity: ” They have the ability to affect a lenders decision on whether to approve or decline a loan. But, as lenders seek ways to reduce their risk, credit scores now have the potential to affect interest rates too.”

There is also the risk of getting your loan application rejected if you apply with a partner who has a bad credit score.

Of course, you might need your partner’s income to qualify for the mortgage amount you want as well. Going for a loan as a single applicant may lower your borrowing power significantly.

Get more financial tips from Lifehacker Australia’s Money section.

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