The benefit of a joint application is higher income, so you'll get approved for more. But if your income alone is enough to get to your price range, you can apply alone to get a better rate (probably just slightly better, since 740+ is very good too). You can ask your lender to run both scenarios and compare.
Key takeaways. Joint personal loans, which involves taking out a loan with a co-borrower, is when two people take out a loan together. Joint borrowing can help you qualify for a loan easier, get a better rate or be approved for a higher loan amount.
You may have a better chance of being accepted: If one of you has a poor or limited credit history, you may find applying for a joint loan with someone who has good credit raises your chance of being accepted.
From the lender's point of view, co-applicants represent a lower risk than single applicants. That's why you might get more favorable terms if you apply with a co-applicant. Applying together means you get to use both people's incomes to qualify, which might mean a bigger loan.
Benefits of a Co-applicant
A borrower with good credit can help an applicant with poor credit or no credit history get approved for a loan. Having a co-applicant with a strong credit history can also lower the loan's interest rate and help a borrower get approved for a higher loan amount—called the principal.
You cannot simply list a spouse's income with, or instead of, your own if you apply in your name alone. However, you can list their income if your spouse agrees to become a “co-borrower” on the loan.
Lenders determine what's called the "lower middle score" and usually look at each applicant's middle score. For example, say your credit scores from the three credit bureaus are 723, 716 and 699, and your partners are 688, 657 and 649. Lenders will then use the lower of the two middle scores, which is 657.
Unmarried partners can open joint bank accounts and finance large purchases together by co-signing loans. Your partner's credit history and debt won't impact your individual credit information, whether you're married or not.
You are almost certain to be approved by at least some lenders for a personal loan if you have good credit, make enough money to easily repay your loan, have been at your job for a while, and your debt-to-income ratio is below 35% -- even when factoring in the payment on the loan you're applying for.
Meanwhile, when you apply together for credit or financing, lenders will consider both of your credit scores. So, if one spouse has a lower score, that could affect your results.
There's no limit to the number of personal loans you're allowed to have. However, the amount of debt you can take on is limited to how much a lender is willing to let you borrow.
Borrowers with a 723 credit score likely won't encounter any issues when trying to get a mortgage loan, as long as they meet other lender requirements, such as steady income, sufficient funds for a down payment, and a low enough debt-to-income ratio.
While the tax code encourages married couples to file their tax returns jointly, there are a few scenarios where married filing separately could be beneficial. These include when both spouses have about the same amount of income and when combining income pushes a couple into a higher tax bracket.
One way to improve your credit score is to co-borrow with someone who has a better credit score than you. By doing so and ensuring that you pay off the loan on time, you can boost your credit score, which will make it easier for you to access better loan terms and interest rates in the future.
Whose Credit Score Is Used on a Joint Auto Loan? Lenders consider both borrowers' credit scores when considering joint auto loan applications. The borrowers must qualify for the lender to approve the loan. Payments, or the lack of payment, affect the borrowers' credit scores.
It might be easier to get approved.
When applying for a joint loan, you're bringing two different incomes, credit scores and debt-to-income ratios to the table. That could give lenders more reassurance that you can repay the loan. In some cases, it could also help you qualify for a larger loan amount.
Married couples opting for joint names on a mortgage loan can benefit from potentially improved rates, terms, and borrowing limits because their combined incomes and credit scores/histories are evaluated by the lender. Their combined earnings and savings can help them afford mortgage payments and qualify for the loan.
In a community property state, it is possible to leave your spouse off the mortgage. However, if you're trying to obtain an FHA or VA loan, your lender may have to consider your spouse's debts when you apply. This may impact your eligibility. If you live in a common law state, it's less complicated.
For other types of credit, such as personal loans, student loans and retail credit, you'll likely want to know your FICO® Score 8, which is the score most widely used by lenders.
Conventional loans typically require a minimum credit score of 620, though some may require a score of 660 or higher. These loans aren't insured by a government agency and conform to certain standards set by the government-sponsored entities Fannie Mae and Freddie Mac.
The lender will only consider your income when determining whether you meet the requirements. Your co-signer's income will not factor into this part of the application. So, a co-signer with bad credit but good income won't help with approval or better rates.
How much of a personal loan you can get depends on several critical factors, such as your credit score, income and total debt. Lenders heavily weigh the likelihood of repayment before deciding how big of a loan you can get.
A joint personal loan enables two co-borrowers to submit a single loan application. A lender considers the credit and income histories of both co-applicants, such as a married couple or a parent and child.
Thanks to the CARD Act of 2009 and an updated ruling from the CFPB, credit card applicants can list their spouses income on their applications — provided that they have reasonable access to that income and are age 21 or older.