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Even when you and your spouse (co-borrower) show more than adequate income to buy and finance a property, both borrowers often need credit scores or explanations that surpass lender standards. Without meeting this requirement, the lower-score borrower might have to withdraw as a co-borrower. The lender will then limit the loan amount to the qualifying capacity of the higher-score borrower.

You can work around this problem. Buy a two- or four-unit property, or a home with an accessory apartment, and use lease income from the rental units to lift the higher-credit scorer's qualifying income. Also, you could bring in another strong credit person (parent, sibling, friend) to serve as cosigner or co-borrower; however, the amount and repayment performance for that mortgage will impact that person's future credit record and borrowing power.

If you are asked to help someone qualify for a loan, be wary. Likewise, if you ask someone to sign for you, pay the loan diligently. Otherwise, you risk the other person's credit score as well as your own.

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Credit Score Booster

Credit Score Booster

There are many misconceptions about credit scores out there. There are customers who believe that they don’t have a credit score and many customers who think that their credit scores just don’t really matter. These sorts of misconceptions can hurt your chances at some jobs, at good interest rates, and even your chances of getting some apartments.

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