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When you and your significant other have made a commitment, you may think you’re ready to share everything — including a mortgage. It’s a romantic notion that can collide with this cold financial reality: Applying for a mortgage with another person can be risky, especially if one of you has a notably lower credit score.

Wait, what?

When you apply for a mortgage with one or more other borrowers, the lender will pull 3 credit scores — based on credit reports from each of the 3 major credit reporting bureaus — and base the loan application on the lowest middle score among the applicants.

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Let’s say you and your spouse jointly apply for a mortgage, and let’s say your own credit scores stand at:

  • 685
  • 699
  • 705

But your spouse’s scores are:

  • 701
  • 717
  • 725

The lender would look at the 2 middle scores — 699 and 717 — and tie the mortgage terms to the lower of those: 699.

The rule may not be common knowledge to many consumers, but it’s been around for decades, says Pava Leyrer, chief operating officer at Northern Mortgage Services in Grandville, Michigan.

“There aren’t very many constants in our business, but that’s a constant,” she says.

Risk is a key factor

You might be wondering: Why wouldn’t a lender go with the higher middle score? Seems fair, right?

It’s all comes down to risk, says John Stearns, senior mortgage banker at American Fidelity Mortgage Services in Milwaukee.

“If you’re going to look at the overall risk, the safest thing to do would be to take the lower middle score,” Stearns says.

The good news is that there’s room for a lower credit score to improve.

“When they start making payments on time their score should go up, because your mortgage is your biggest monthly payment,” he says.

Is a joint application necessary?

In a Bankrate survey, nearly 4 in 10 Americans said knowing someone’s credit score might make them think twice about dating that person. But you don’t have to be quite so exclusive to avoid a higher-cost mortgage.

The easiest way to get around the rule when you’re in a relationship is to have one person apply for a mortgage, though that person would need to have a strong enough application that would allow them to qualify alone.

But as a recent Washington Post article points out, there are couples who have sentimental reasons for applying jointly. Even if your name isn’t on the mortgage, you can still be named on the title policy, Stearns explains.

“That gives you equal ownership with the person who has the loan,” he says.

Another thing to keep in mind is that when you’re not on the mortgage and the borrower makes a late payment, your credit won’t take a hit.

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Do a credit checkup

Before you decide to jointly apply for a mortgage with someone else, review your credit reports. Get a free credit report today at myBankrate.

“Having knowledge of your base report, even without a score, is extremely beneficial,” Leyrer says.

Take that information to a mortgage professional and get some guidance on how to move forward. Additionally, be sure to find out what your co-borrower’s credit scores are.

“Know the importance of adding somebody to a mortgage with a potentially lower score,” Stearns says.

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