Can I qualify for a joint home loan if my partner has bad credit?

As a couple, it's entirely possible that you and your partner’s credit scores could affect your financial future, particularly when applying for a joint home loan. However, if one of you has bad credit, there may be steps you can take to help you qualify for a loan.

Having a partner with bad credit isn’t necessarily uncommon. You may only find out that this is the case when you apply for a joint home loan. Getting married doesn’t merge your financial history with that of your partner but there are aspects of marriage that may impact your credit score.

When you submit a joint application for finance, the lender will assess both applicants’ creditworthiness before making a decision and determining an interest rate. If you have an excellent credit score, but your partner’s score falls into a lower band, or vice versa, then it’s unlikely the lender will offer you their most competitive interest rate.

Similarly, if you or your partner have a bad credit score, the lender could potentially reject your joint application altogether, regardless of the other applicant’s score. This is because both applicants are equally liable for the debt, so the lender must assess the overall level of risk.

What can you do to improve your chances of getting approved for a joint home loan?

If you or your partner have bad credit there may be steps you can take to improve your chances of success, including:

• Assessing your individual credit scores for free before you begin the process of applying for a joint home loan.
• Saving for a higher deposit, ideally 20 per cent or more. If you borrow less than 80 per cent of the property value, you’ll also avoid paying lender's mortgage insurance (LMI).
• Keeping consistent employment records and maintaining regular savings habits and an economical lifestyle can help prove financial stability and responsibility.
• Delaying your decision to buy a property until your partner’s credit score improves. Alternatively, you may want to consider a solo application.

How can you help your partner improve their credit score?

It’s important to remember that a person’s credit score doesn’t define them. Just because someone might not have an excellent credit score doesn’t mean they are inherently bad with money. Sometimes things can happen that may be out of a person’s control, such as losing a job, unexpected medical bills or other income-related issues.

There are ways you could consider working with them to help them improve their credit score. You could start by discussing and setting financial goals together, and then consider your options:

• Apply for a joint credit card with a small credit limit - A card with a small limit could help improve a credit score if it is used consistently, sensibly, and regularly paid off on time.
• List your partner as an authorised user on your credit card - If used responsibly, this may help your partner’s credit score over time and is particularly helpful for those with a thin credit file and a lack of credit history.
• Keep track of progress made – Ensure that both you and your partner are regularly checking your credit scores to monitor changes. If your credit scores have improved, you may be in a position to negotiate better interest rates with your credit providers.

While these tips may assist you, if you find the process overwhelming, consider consulting a financial expert or advisor who can offer personal guidance based on your particular financial situation.

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