'My partner's credit score is ruining our chances of getting a mortgage. What can I do?'
We're answering your moral money questions - this one's from Rob, who's partner's credit score is putting their dream of buying a home at risk.
Buying a home with a partner can be both exciting and emotional. It’s a major decision and one that will tie your lives and finances together for a long time, even influencing your own ability to get credit in the future.
You’re right in thinking that your partner’swill affect the interest rate you’ll be offered on your mortgage. This is because when you apply for a joint mortgage, lenders assess your credit-worthiness together.
Depending on how low your partner’s credit score is, you might struggle to get a good deal. But this doesn’t mean you won’t get a mortgage at all.
The good news is, there are lenders out there who specialise in ‘bad credit’ mortgages. However, their rates are normally far higher, meaning both of you will end up paying more for your mortgage.
If you want to be eligible for the best mortgage deals, your best bet is to encourage him to boost his credit score – starting now. It could make a real difference to the amount you pay over the coming months and years.
Time to talk about your future (and your finances)
As well as the credit score itself, it’s important to consider the reason why your partner’s score is so low. Is it that he’s simply never used credit before and so doesn’t have a credit history for the lender to consider? If so, that can be fairly easily solved by using a credit card to build up some credit history.
But if he’s missed payments or has CCJs against his name, those can leave a mark on his credit rating for years, which means improving his score will take much longer.
You could offer to help your partner improve his credit score. Of course, that might not be an easy conversation to have, as many of us don’t like discussing our finances even with our loved ones. But by explaining that your goal is a financially secure future for you both (and by staying calm and not blaming your partner) you have an opportunity to stop and take stock.
It’s also important to think about your general spending habits and debts. When you apply for a mortgage, not only do banks look at your credit score, they also assess whether you’ll be able to afford your repayments. This means they’ll look at all of your outgoings from the past six months.
So, if either of you have a lot of outgoings and expenses, be those debt repayments, childcare costs or even gym memberships, this could affect whether you’re likely to qualify for a mortgage. Don’t forget that someone with a great credit score might still struggle to get a mortgage if their income is all tied up in monthly bills.
Now would be a great time to sit down and have a big discussion about credit scores, outgoings and debt levels. This way, you’ll both know exactly what your situation is and how you can improve it, and you can be sure that you have the same financial goals and values, which is the basis for a secure future.
How to help your partner improve his score
There are lots of ways that your partner can rebuild and improve his score - some will have an impact quickly and some might take longer to work their magic. The sooner he starts to improve his score, the sooner you’ll be able to buy your home.
There are some simple steps he can take immediately, such as checking his credit file for errors, ensuring he’s registered to vote and getting his name on some bills if he doesn’t already. After that, it’s more of a long-term project.
One of the best things he can do is to keep his credit utilisation low. So, if your partner has a credit card or overdraft then living well below the maximum – below 30% ideally - is a great idea. This will show lenders he can manage his credit sensibly.
If his credit score is really low, he might want to consider taking out a credit builder credit card. The interest rate can be very high but by using it regularly and repaying it off in full each month, he would demonstrate to lenders that he can use credit without getting into difficulty. If he pays it back on time and in full each month, he won’t pay any interest.
Check outfor some more ideas.
The more you can do to help him repair his credit score, the better – even if it’s just making the odd suggestion and offering encouragement. You’re planning to buy a home together, and honesty and support are great foundations for such a step.
What about your score?
One more thing: you said your partner’s score is ‘far worse’ than yours. You haven’t told me your exact circumstances, but it may be worth you taking some time to try and improve your own score, too.
You could use what you’re doing well as a way of showing him it’s possible and opening up those important conversations with him.
If you still can’t get him to act then it’s time for some difficult decisions. You could always take out a mortgage in your own name, but there are downsides to this. For example, your income alone may not be enough to buy your first home - ditto your savings - and there’s a risk that going it alone could affect your relationship.
Alternatively, you could wait for his credit score to improve. But if you’re going to put a major life event on hold, you need to be sure he’s taking the right steps to make that happen.
Probably one of the most important things to remember is that if you buy a home together, your partner’s financial affairs will also affect you. It’s important for you to both be on the same page before you commit to such a big purchase – and that starts with him taking his credit score seriously.
Best of luck!
Frankie takes the often confusing world of finance and makes it clear and simple, to help you get your money sorted.