But when it comes time to buy a home and your lender reveals serious issues with your spouse’s credit, things can get awkward fast. Whether your spouse went on a few credit card–fueled spending sprees in grad school, has an old account collecting dust, or has a financial history that’s much more troublesome—you’re going to have to face reality. Because if you’re looking to get a mortgage, you could get tarred by your spouse’s fiscal brush.
| Oct 16, 2017
Don’t despair, or head for the marital exit—credit can be repaired. It will take time to get things back on track, but it can be done systematically. So roll up your sleeves, and learn how to fix common credit problems together!
1. Look for reporting errors
You’ll first want to make sure that your spouse’s credit isn’t being dinged unfairly. It’s important to check your credit report annually and look for errors. If you find problems, call the credit bureaus (and your creditors) to get issues fixed ASAP, says John Shunnarah, CEO of First Commonwealth Mortgage in Louisville, KY.
“Vendors can provide a letter stating there was a mistake and get the error off your report immediately,” he says. “That helps boost your credit tremendously.”
2. Lower the credit utilization rate
The more available credit you have, the better it looks on your credit report. Even if you have just a few credit cards and low spending limits, lenders do a double take if you’re using more than 30% of your available credit. This is known in the industry as having a high credit utilization rate.
Making payments on time is one of the easiest ways to keep your credit score in top shape. But it won’t help much if you’re teetering on the edge of your available credit limit, Shunnarah says.
Instead of putting money toward high-interest credit cards, pay all of your outstanding card balances down to 30% or less of your maximum credit limit. Why? Your score will increase much faster, he says.
“Most lenders can do a rapid rescore on your credit report, which takes about a week,” Shunnarah says, noting that lenders look favorably on mortgage applicants with low credit utilization rates. “Also, always pay more than the minimum amount on all of your revolving accounts; it gets you there faster.”
3. Encourage your spouse to establish a credit history
Does your spouse prefer to pay for things with…