Many future homebuyers, especially first-time buyers, do not feel confident about their credit score status, says a new survey by Experian about homebuying and credit. In fact, 34 percent of future buyers say their credit score might hurt their ability to purchase a home and 45 percent have delayed a purchase to improve their credit score.
According to the survey, 35 percent of future buyers said they do not know what steps to take to qualify for a larger loan, and 29 percent would purchase a more expensive home if they had better credit and could qualify for a larger loan. Surprisingly, 3 out of 4 future buyers are not pre-approved for a home loan.
“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, director of Public Education at Experian. “Consumers planning to purchase a home should check their credit scores and reports to see where they stand. From there they can develop a financial plan so they are in the best place to try to secure the loan they desire.”
Many future homebuyers are taking action to improve their credit profile. Almost 70 percent of survey respondents are paying their bills on time and 60 percent are paying off debt. In addition, 28 percent of future homebuyers surveyed are keeping balances low on credit cards and 15 percent are taking steps to protect their credit information from identity theft and fraud.
“It is important to take steps early in the homebuying process to allow time to make changes and have those changes be reflected on your credit score,” Griffin explains.
Unfortunately, low credit scores have led some homebuyers to delay or completely forego a home purchase, with one in five reporting that they were likely to opt out of the loan process or purchasing a home all together for the next five to 10 years. Of those deciding to simply delay a home purchase, 45 percent reported the delay was made in order to secure better interest rates.
For more information on the survey, visit www.Experian.com.