What To Do When Your Wife* Has Good Credit but No Income
*Anything said here can apply to people of any gender and to any type of relationship
If your wife has good credit but no income, you might wonder if you can include her on your loan applications.
The good news is you can in some cases, but there are factors to consider before moving forward.
What Does It Mean When Your Wife Has Good Credit But No Income?
Credit scores and income don't go hand-in-hand. A person can have great credit but no income, or vice versa. Some people even have a good credit score and good income. That's the best of both worlds.
If your wife has good credit but is a stay-at-home mom or doesn't work for any other reason, she still may be able to help you qualify for great financing terms even if you have a lower credit score. It depends on what her credit history shows.
How Does Credit Work With a Married Couple?
Married couples don't have identical credit scores. While you may have some joint accounts that affect your credit scores similarly, the credit bureaus use all credit lines and debts you've had throughout your life to calculate your credit score.
Consumers have three credit scores, and lenders determine loan eligibility using the lower middle score (i.e. whichever spouse’s middle score, out of the three credit scores, is lower) between spouses. If you have poor credit, your wife's high credit score may be a compensating factor in helping you secure financing, but it might not be enough to get you the best terms available.
When Your Wife Has Good Credit but No Income
If your wife has good credit but no income, you might wonder if it's good or bad for your financial situation. The good news is that it is much better than if she had poor credit. A spouse with bad credit and no income would not help you secure new loans or get attractive terms, and you'd have to leave her off any applications for home or auto loans. If she has decent credit, you can use it to help improve your chances of approval.
But many factors affect your loan approval rate, including your credit scores and debt-to-income ratio, so it isn't just one factor, fortunately.
Pros
Financing Options
A good credit score opens up more possibilities for loans. For example, you might have short and long term options or a chance to compare interest rates from different lenders. Good credit scores also provide more mortgage loan opportunities. This can be beneficial if you have bad credit but a good income. Your wife's higher credit scores could help.
Mortgage lenders typically take the lowest middle score when there are joint applicants; however, other loan types, such as credit cards, may only consider one credit score from each spouse.
Credit Profile
A good credit profile goes a long way on a loan application. You'll have more opportunities for different lenders and loan options. In other words, you won't be stuck with only loans meant for people with bad credit.
Even if a person's credit is bad, having a joint applicant with great credit can offset the low score and help you get approved.
Financial Goals
Good credit scores can help you reach your financial goals faster. For example, you may be eligible for shorter mortgage terms if you have great scores. If you can get a 15-year versus a 30-year mortgage, you can pay your mortgage off in half the time, leaving more money for other financial goals.
You can also use good credit scores to qualify for attractive loan consolidation options to reduce your monthly payments and pay your debts off faster.
Cons
Unequal Financial Contributions
Great credit can help you get better terms on loans or offer more possibilities for financing, but it may feel unfair to you if one spouse isn't contributing to the mortgage payment or other debt payments. A credit score doesn't pay the bills, after all.
Plus, some lenders only focus on the credit history of the person with income. Lenders may exclude her from the application if your spouse's income doesn't exist.
Limited Financial Independence
If you rely on your spouse's credit score to get a loan, you may feel financially tied up. If you have a high income but don't have a high enough credit score, you rely on your spouse's credit score to get approved, decreasing your financial independence.
Societal Expectations
Society expects husbands to have good credit and earn income, so it can be embarrassing to admit you need your wife's credit report to help you secure financing. While you should never care what others think, it's the way our society often works.
Good Credit But No Income Impacts
So, what does it affect when your spouse has an excellent credit history but no income?
Loan Interest Rates
Lenders base interest rates on your risk of default. In other words, the higher the likelihood that you will make your payments on time, the less lenders charge you in interest. So, while your spouse may be unable to help with the payments, her credit history can help you get more favorable loan terms.
Buying a House
Not having a partner's income to help you qualify for a mortgage can be difficult. Lenders look at two important factors. — your income and your credit history.
The income helps balance out any debts and lowers your debt-to-income ratio. The lower your DTI is, the easier it is to get approved. And if your spouse's credit score helps you qualify for a certain mortgage program, you may be able to borrow more money and still get a mortgage payment you can afford.
The key is how much debt your spouse has. If your wife has good credit but has a lot of outstanding loans, the lender will include the loan payments in their calculations to determine what you can afford, which can decrease the amount they’re willing to lend you.
Savings
A low credit score may cause you to pay higher interest rates and fees on loans, which leaves less money for savings. A spouse with a higher credit score can help you get better loan terms, leaving more money for savings and other financial goals.
Financial Security
Good credit scores help couples get the most attractive loan terms, which may lead to more financial security. Having payments you can afford that don't put you in over your head can lead to better personal finance decisions and help you build financial security.
Your Relationship
A marriage isn't based on credit history, but it may help your relationship if both partners have good credit. Money is the source of many marital arguments, especially if there isn't enough income to cover the bills, but a wife with a good credit score may help you get more favorable terms on loans and credit card debt to help you pay it off and feel financially sound. And the less stress or conflict you have associated with money, the more time and energy you’ll have to work on other things or even enjoy yourselves!
What Can You Do with Good Credit and No Income?
So if your wife has good credit but no income, what can you do with it? How can she help your financial situation?
Utilize Credit Cards to Your Advantage
People with good credit often have access to credit cards with attractive interest rates or even 0% balance transfer rates. Especially where a credit card application asks for household income, allowing you to leverage your income and your spouse’s credit score, you may have more opportunities like taking advantage of promotional interest rates to pay off existing debt and get your finances in order. You can also apply for rewards credit cards that can pay you cash back if used responsibly.
Explore Microloans and Peer-to-Peer Lending Platforms
If you have bad credit but your spouse has good credit, you may have more luck securing financing on peer-to-peer lending platforms. These platforms have more relaxed guidelines and look at situations from a borrower's perspective. If one spouse has good income and the other has good credit, it can create the perfect situation for timely payments.
Renting or Leasing Possibilities without Large Upfront Costs
Landlords and leasing companies usually look for high credit scores when taking on new tenants. Renters with excellent scores pose a lower risk of defaulting on their rent or suddenly vacating the property. Because of the lower risk, most landlords will lease without hefty security deposits and other upfront costs.
FAQs
Can I Use My Wife's Credit and My Income to Buy a House?
Some mortgage lenders may allow you to include your wife on a mortgage application as a co-borrower, even though she doesn't have a stable income. Some will consider her a 'compensating factor' and a reason to approve your loan application, but they'll include your credit score, too, which may make the terms less attractive.
Can I Get a Joint Mortgage If My Wife Has No Income?
If you need your spouse's credit to qualify for a mortgage, a lender may allow it. However, remember that they must include your spouse's debts, such as an auto loan or credit card debt. If your gross monthly income isn't high enough to cover all the debts, it could hurt your chances of approval.
Can I Use My Credit Score and My Husband's Income?
Lenders often look at the combined income between applicants to determine if they qualify. But most lenders won't allow a person without income to be the primary borrower; it's the other way around.
Will Her Credit Score Affect Our Loan Interest Rates?
Lenders look at the big picture when assigning loan interest rates. Adding your spouse onto the loan if she has good credit can help you get a more attractive interest rate.
Can We Apply for Loans Jointly With Her Good Credit and My Income?
Lenders will consider the working and non-working spouse's credit history when determining if you qualify for a loan. You can't exclude the credit score of any borrower.
Conclusion
If your wife has good credit but not income, it might help you get more attractive loan terms or borrow more money. It depends on the situation and how much debt she brings to the table. If you're not sure how your credit history affects your chances or if your spouse's credit score can help you, try my free consultation to learn more!
Want to level up your game around money in your relationship? My free quiz will help you learn your Couple’s Money Personality Type AND how you can grow from there!
Adam Kol is The Couples Financial Coach. He helps couples go from financial overwhelm or fighting to clarity, teamwork, and peace of mind.
Adam is a Certified Financial Therapist-I™, Certified Mediator, and Tax Attorney with a Duke Law degree and a Master's in Tax Law from NYU. He is a husband, dad, and musician, as well.
Adam's wisdom has been shared with The Wall Street Journal, the Baltimore Ravens, CNBC, NewsNation, and more.
