Co-borrowers with low credit scores will increase your interest rates since lenders use the lower middle score for all borrowers
Yes. It matters because credit scores can significantly affect your interest rate. When lenders check credit, they access credit scores generated by the three major credit bureaus. Lenders then qualify you based on the "middle" credit score of the three bureaus.
If there is more than one borrower on a loan application, lenders correlate to the lowest middle score of all the borrowers on the application.
For example, if a wife and husband are applying for a loan and the wife has a middle credit score of 800 while the husband has a middle credit score of 650, their interest rate could be impacted by as much as 1% because of the husband's credit score!
One solution is to remove the husband from the loan (and still keep him on title), but that only works if the wife has enough income to qualify on her own. The other solution is to have the husband work with one of our recommended credit repair agencies to improve his credit score prior to getting into contract to buy a home. This process, however, can take several weeks or even months.