Applying for a home loan when your partner has a bad credit score
Applying for a home loan with your partner is one of the biggest financial decisions you can make. It’s hard enough deciding what to eat for dinner every night, are you ready to commit to a 30-year loan together? If your partner has a bad credit score, this can make things even more complicated!
So, what are your options?
Check your credit score and credit report
First off, do you even know your credit score? Your credit score is an indicator of your creditworthiness, so it’s a good idea to check your credit score and credit report at all the major credit reporting bodies in Australia. It may help you identify the issues causing your low credit score. For example, you may have a default on your file, and you could choose to wait for it to drop off your credit report before applying for a loan.
Did you know that you can check your Experian credit score and credit file information at Credit Savvy? Bonus: It’s free!
Remember, your credit score and credit report are just one of the factors that a lender uses to assess your home loan application. A great credit score doesn’t guarantee approval!
Do a full assessment of your finances
Get all your finances out in the open. The good, the bad, and the embarrassing. Is there something that could potentially stop a lender from approving your loan? You both need to know about it.
Check out alternative lenders and loans
While a standard lender, such as a bank, might not approve your mortgage, a non-traditional lender may be more lenient or have products that are more flexible for your circumstances.
Rethink your timeline
While it is the Australian dream to own a home, it may not be the right time to buy if both of you are not in financial shape. Extending your timeline can not only allow enough time to pass for black marks to drop off your credit report, it can also give you more time to save up a larger deposit, save up for emergencies, or to help pay off other debts you might have before buying your home.
Talk to an expert
Navigating the home-buying process can be quite challenging, especially if you’re a first-home buyer. You might like to consider speaking to an expert, such as a mortgage broker or a financial advisor. These experts can help you assess your financial situation and the options that are available to you.