Credit Woes Hold Many Would-Be Buyers Back
April 21, 2016
Many future home buyers say they’re not confident that their credit score is good enough to qualify for a mortgage, according to a new survey by Experian of 500 consumers.
In fact, 34 percent of future home buyers believe their credit score may hurt their ability to purchase a home. Forty-five percent say they have delayed buying a home in order to improve their credit score, the survey found.
Read more: What to Know About Credit Scores
One in five would-be home buyers say they will likely not purchase a home for the next five to 10 years because of their credit profile.
“Your credit profile is one of the factors that can have a substantial impact on securing a home loan because it is used by lenders as an indicator of your financial health,” says Rod Griffin, Experian’s director of public education. “Consumers planning to purchase a home should check their credit scores and reports to see where they stand. From where they can develop a financial plan so they are in the best place to try to secure the loan they desire.”
Some future buyers are taking steps to improve their credit. Nearly 70 percent of respondents told Experian they are paying their bills on time. Sixty percent are paying off debt. Twenty-eight percent are keeping balances low on credit cards.
“It is important to take steps early in the home buying process to allow time to make changes and have those changes be reflected on your credit score,” Griffin says.
But 35 percent of future buyers surveyed by Experian say they are unsure of what steps to take to qualify for a larger loan. Twenty-nine percent of buyers say they would purchase a more expensive home if they had better credit and could qualify for a larger loan.
Updated: September 20, 2019