Spouse average FICO credit score is higher?
Having drastically higher average credit score than that of your spouse sometimes presents a problem. Especially if your incomes are quite different, and you and the spouse are applying for a mortgage together to use both incomes in order to qualify. Both will be on the mortgage application. Normally, the spouse with the higher income is a primary borrower, whereas the spouse with the lower income is a co-borrower.
In ideal scenario, primary borrower has higher income and higher or close to that of the co-borrower average FICO credit score. But that is not often the case, so what happens when the co-borrower spouse has higher credit score?
If the average FICO score of the higher earner is only lower by 20 to 25 points than that of the spouse, he or she can remain primary. More importantly, the credit score should not fall into a different credit rating category. This is the case where your lender can switch you and the spouse on mortgage application with no consequences, giving you the same interest rate, fees as quoted before.
If the above conditions are not met, than a spouse with higher average FICO should become primary and the other becomes co-borrower. The only condition is that the income of the new primary borrower is not lower by a lot. If this condition can not be met, than, the borrower with lower average FICO credit score and higher income remains primary borrower and interest rates and fees of the mortgage are likely to be higher.
By how much the income of the lower-earning spouse can be less than that of the higher-earning to become a primary borrower? A lot depends on the mortgage amount, assets and sizes of the salaries, but in general, the difference should not exceed $15,000 to $20,000. If the higher-earning spouse has average FICO score low enough for interest rate and fees to go too high, he or she must work to establish credit prior to applying.
Fri Sep 16, 2011 10:09AM | Copyright: www.bad-credit-advisor.com | More in Credit Score Help | Comments (0)
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