Here's What Happens When You Apply for a Mortgage Jointly and One of You Has Poor Credit

There are different factors mortgage lenders take into consideration when deciding whether to loan money to an applicant. These include your income, existing debt relative to your income, and credit score.

The higher your credit score, the more likely you are to get approved for a mortgage. But what if you're applying for a mortgage jointly with another person and their credit score isn't great?

You might think you can get around that issue if your credit score is excellent. After all, if your credit score is an 830 and your co-applicant's score is a 570, that averages out to a 700, which is a decent credit score to be applying with.

But unfortunately, that's not how things work when you're applying for a mortgage jointly and one of you has poor credit. So you'll need to know how to navigate that situation.

It's not just an average

For the sake of this discussion, let's say you're applying for a mortgage with your spouse, only their credit needs work. Mortgage lenders won't just average out their credit score and yours when evaluating your application, says Experian. Rather, lenders tend to pay the most attention to the lower score of the two. And if it's too low to qualify for a mortgage, you should both expect to be denied.

How to overcome your co-applicant's poor credit

So you're trying to buy a home with your spouse and their credit isn't great. One option, of course, is to hold off on your mortgage application until their score improves. You can help your spouse boost their credit score by:

• Encouraging them to pay all bills in their name on time
• Helping them pay off a chunk of their credit card debt
• Reviewing their credit score and working to correct errors that could be negatively affecting their score

Of course, boosting a credit score can take time. So if you want to buy a home now, you may want to consider applying for a mortgage on your own.

Remember, a mortgage is a legal contract that determines who's responsible for paying back the loan used to finance a home. It doesn't dictate who owns the home.

It's possible for you and your spouse to both be on the title of your home, but for only one of you to be on the mortgage. That way, you still own it jointly, but your spouse's poor credit doesn't have to get in the way of being able to get the financing you need.

Of course, if you're reliant on your spouse to help pay for your home and they fall behind on their part of the deal, you may not have much (or any) recourse if they're not on the mortgage. But if you and your spouse have a solid relationship and set reasonable expectations, this may not be an issue at all.

Even if you have perfect credit, having a co-applicant with poor credit could hurt your chances of getting a mortgage. So if you want to move quickly on a home purchase, applying for financing on your own could be your best bet.