First-Time Buyers Opt Out of Buying a Home Because of Credit Scores
First-time buyers comprise the majority of potential homebuyers in this market. However, a recent report shows that one in five future first-time homebuyers are more likely to opt out of buying a home altogether. Why is this the case?
As previously reported here on Realty Today, the millennials comprise the majority of potential first-time homebuyers in the market. This is the reason why several companies are targeting their products towards this population by creating more affordable housing options.
Despite all these efforts, however, a recent report from Experian shows that one in five first-time buyers are more likely to opt out of purchasing a home or applying for a mortgage, according to CNBC. One of the reasons cited for this is their credit score.
"We're still seeing credit remain relatively tight," said CEO of Ellie Mae, Jonathan Corr.
According to the survey conducted by the company, about a third of potential first-time home buyers are hesitant to purchase a home because of their credit scores. About 45 percent were delaying their home purchase in order to improve their credit scores.
As most people know, a good credit score is one of the requirements needed when applying for a home loan. This helps give the lender an overview about your financial capabilities and your ability to pay them on time.
A good credit score can also give a lot of benefits. For instance, those with higher credit scores can get lower mortgage rates.
"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," said the director of public education at Experian, Rod Griffin.
The chief economist for the National Association of Realtors also encourages young home buyers to start building their credit now that mortgage rates are close to hitting its lowest and prices of rents are on the rise. Certain steps such as paying their bills on time and taking care of their loans can help improve your credit.