Poor credit rating Loans

couple buying a housePicture this. You’ve just married the person of your dreams. You’re home from your honeymoon and now you’re ready to kick your relationship up a notch. That’s right, you’re ready to take the plunge from newlyweds to homeowners. You’ve searched online, found the perfect home, went to look at it, fell in love and now you’re ready to put in an offer. You contact your banker, give them your information and listen as your dream comes to a screeching halt. What’s the roadblock? Your spouse’s bad credit.

“A mortgage is a significant example of the influence the credit score of a spouse can have on the process of acquiring a loan, ” says directing attorney of Lexington Law, John Heath.

Your income, debt-to-income and your credit score all play a role in whether you’ll get approved for a mortgage. They also help determine the interest rate you’ll pay on the loan. Heath says, if you do get approved, you will most likely have a much higher interest rate. “A large discrepancy between the credit scores of partners means that the couple in question runs the risk of getting stuck with a mortgage with a higher interest rate. This will make the mortgage more difficult to pay off.”

Here are some options to consider if this situation applies to you.

Improve Your Credit

“Be proactive with your credit before you start shopping for a house and before you’re applying for a mortgage, ” says co-creator of The Good Credit Game, Lee Gimpel. “If you or your partner have bad credit, it’s best to work to improve it months ahead of time rather than not getting a mortgage or paying a higher rate on that loan.” Gimpel says it’s important to remember that improving your credit doesn’t have to take years, but you can’t expect it to happen overnight.

Dispute Credit Report Errors

You have the right to dispute any error on your credit report, and it may benefit you to do so. According to a 2012 study by the Federal Trade Commission (FTC), five percent of consumers had errors on their credit reports that could result in less favorable terms for loans. Errors may include a wrong Social Security number, address, late payment or account. Learn how to dispute errors on your credit reports from the FTC.

Apply Individually

If you’re the spouse with the higher credit rating, try applying for the mortgage yourself. Keep in mind if you go it alone, only your income is factored in, so only your income counts. But just because you apply by yourself doesn’t mean your spouse is completely off the hook.

“Mortgage companies have become stricter in doing their due diligence to determine if you are currently married. Should they discover that you are married, they may require a credit check of both individuals, ” says finance expert and contributor to CompareCards.com, Tom Kerr.

Consider Adding a Parent to the Loan

“If you marry someone with bad credit, and are denied by a mortgage company, consider adding a parent to the loan and deed, ” says relationship expert and author, April Masini. “While it’s not as romantic as getting the loan together, in relationships, there are inequities, and if buying the home is more important than the way the deed and loan are titled, this is an option.”

Know Your Partner’s Credit Before You’re Married

If there’s one thing experts agree on it’s this ­­– know your partner financially before you’re married. It can save you a lot of frustration and heartbreak later on down the line.

“There are enough obstacles to a normal marriage without being fiscally surprised! Debt, unexpected spending or saving habits, family ties with money and simply generosity vs. stinginess are all important ways that money affects relationships, so know your spouse and their debt, credit and habits, before you marry, ” says Masini.

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Additional information

Small Bad Credit Loan | How To Get Fast Loan With Bad Credit.
Small Bad Credit Loan | How To Get Fast Loan With Bad Credit.
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Credit scores: Boost your credit rating - MoneySavingExpert
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Popular Q&A

How can one get a poor credit rating loan?

If one has a poor credit rating, they may find it difficult to get a loan. Some ways to get a loan with a bad credit rating include, getting a secured loan by using one's house to secure a loan. If one does not have a house, one can apply for a secured credit card which helps to rebuild one's credit history. One can also get a private loan from a private lender, but, be prepared to pay a high interest rate.