Credit Scoring for Couples

My husband and I recently joined the droves of Americans who are taking advantage of the Fed's interest rate cuts and are refinancing their mortgages. We live in the silicon valley and have been offered a 5.25% interest rate for a conforming loan, no closing costs, which is a full point lower than our existing mortgage, which we acquired in March, 2006. As part of the refinancing, we are now going through a credit evaluation process.

I've always wondered how lenders evaluate credit scores for couples. Are the scores averaged and normalized across couples? Can one person's strong credit compensate for another person's weak credit, or is strong credit always negated by poor credit? Our mortgage broker informed us that lenders (HSBC in our case) will typically look at each person's set of scores, throw out the high and the low, and take the lowest middle score between the couple. So if Jill's middle credit score is 800 and Bob's middle score is 550, the lender will use 550 to determine the interest rate. Lesson learned - poor credit will more often than not negate strong credit.