‘I hate the idea of credit cards, but I understand that it could impact our opportunities down the road.’: Me and my wife want to buy a home, but do we both need good credit to get a mortgage?

Hey Money Minder,

So, me (23M) and my wife (22F) are planning to buy a house in a couple of years. We just graduated from college and are grinding to save up for a down payment.

I’ve been hearing mixed opinions on whether both of us need good credit for a loan. I’ve never taken out any loans (no credit cards, no student loans, paid cash for my car), so I basically have no credit history. On the flip side, my wife has one credit card that she uses from time to time; she always pays off the full balance automatically each month. Her credit score is top-notch because of this.

Do I need to start building my credit too? I’m not a fan of credit cards, but I’m aware that it might affect our options in the future.

Farewell,
Future Homeowner”

Response from THE MONEY MINDER:

Hello There,

Congratulations on finishing college and starting this exciting journey of homeownership with your wife! It’s great that you are already saving towards a down payment, as that is a significant step in the right direction. Regarding your question about credit, it is true that having good credit can positively impact your loan opportunities and terms.

Given that your wife has a good credit score due to her responsible use of a credit card, it might be beneficial for you to start building credit as well. While you might not be a fan of credit cards, having a credit history can open up more options for you when it comes to applying for a mortgage. One practical approach could be to start with a secured credit card, which works similarly to a traditional credit card but requires a security deposit as collateral. By using this card responsibly and making timely payments, you can gradually build your credit over time.

Remember, building credit is a marathon, not a sprint, so it’s essential to be patient and consistent with your credit-building efforts. As you continue to save for your down payment, adding positive credit history to your financial profile can work to your advantage when the time comes to secure a mortgage. Keep monitoring your credit score regularly and aim to maintain a healthy credit utilization ratio to strengthen your creditworthiness.

In the end, the decision to build credit is a personal one, but having a good credit score can offer you more flexibility and better loan options in the future. It’s all about finding a balance that works for you while keeping your long-term financial goals in mind. Best of luck with your home-buying journey!

Farewell from THE MONEY MINDER