Your partner has less than stellar credit, now what?

February 18th, 2010 by Altaire Townhomes

Starting a life with each other can be both exciting and challenging. You’ve owned before, but your partner hasn’t. It’s time to find the perfect place to start your life together. So what happens when you begin looking for your first home together and find out that one of you is less than perfect on paper? Suddenly, you love everything about your significant other, except their credit score.

Usually when a couple applies for a mortgage, a lender will review the credit history of both applicants. A negative history of one individual is likely to have an effect on both. These days it is rare, but if one individual has sufficient income to obtain the mortgage on their own (as a sole applicant), then only one credit history may be used for the mortgage loan.

What can you do to move forward together?

If you are ready for the commitment, plan ahead. There is still time to improve your credit history and take advantage of home ownership in today’s real estate market.

  1. Obtain a copy of your credit report. Credit Reporting Act guarantees you access to a free credit report from each of the three nationwide reporting agencies — Experian, Equifax, and TransUnion — every twelve months. It’s free here.
  2. Eliminate issues – Pay down large sums of any revolving debt. Spot identity theft. Dispute any inaccuracies.
  3. Practice good habits – Lenders will be looking at your rental payments, car payments, etc. Pay your bills on time! Most lenders look for 1 year’s worth of good history. Demonstrate to a lender you are capable of making monthly mortgage payments.
  4. Establish a credit history – If you lack one, secure a credit card and begin making timely payments. Make sure the credit card company reports your payment history to credit reporting agencies.
  5. Talk about your housing needs together – Do you have realistic goals? Do you share priorities and a vision of what your new home will be? Does the area include future employment opportunities? Your first home may not be your dream home, but it should be a place that you envision sharing for a minimum of 2-3 years.

Purchasing a new home in today’s climate certainly has its advantages, including historically low rates, competitive pricing, tax write-offs and tax credits. Don’t be discouraged by a less than stellar credit report. Make the changes today, so that you are prepared for tomorrow.

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Altaire is an Upscale Community located in beautiful Palo Alto. Now Selling New Contemporary-Style 1,2,3 and 4 bedroom homes.
Altaire Homes 3901 Fabian Way, Palo Alto, CA 94303 | 650.966.8881 Exclusively represented by: Pacific Marketing Assoc. #01220373


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