DSNews by: Xhevrije West
According to a recent survey from Experian Consumer Services, 95 percent of homebuyers are aware that credit scores play a significant role when purchasing a home, and those who know their credit scores feel more prepared to buy. In addition, 45 percent of future homebuyers say they put off buying a home in order to work on their credit so that they can qualify for better interest rates.
“No one likes to go into a lender’s office, whether buying or refinancing, and not know the state of their credit; it makes them feel helpless,” said Becky Frost, senior manager of consumer education at Experian Consumer Services. “Our survey shows when people interact with their credit by tracking it and learning more about the factors that affect it, they feel more confident about their purchasing power.”
Experian’s survey results display the effect that knowledge of credit can make in the homebuying or refinance process. The survey was given by Experian Consumer Services, produced by research firm Edelman Berland, and conducted as an online survey of 500 buyers from April 7, 2015, through April 14, 2015. The buyers were split between 250 adults who purchased a home within the past year and 250 adults who plan to purchase a home in the next year. The margin of error is plus or minus 4.4 percent overall.
According to the survey, 70 percent of people who know their credit scores feel significantly more prepared to buy a home versus the 54 percent of those who do not know their credit scores. About 62 percent of homebuyers know that their credit scores could mean favorable interest rates to refinance their home.
Future buyers are sometimes uncertain about the homebuying process, the survey says. They are usually anxious about receiving good interest rates, with 41 percent concerned their credit score will not qualify them for the best rate available. Of the respondents that expressed concern about their credit status hurting their ability to buy a home, 27 percent do not even know their credit score. Of those who do not know their credit score, 48 percent are concerned that their credit status could hurt their ability to purchase a home.
Actively working to improve their credit score has become a priority for 58 percent of future homebuyers so they can qualify for a better home loan interest rate, Experian reported. Of those who are making an effort to improve their credit score, 55 percent are paying off debt, 54 percent are paying bills on time, 28 percent are keep credit card balances low, 20 percent are protecting credit card information from fraud/identity theft, and 16 percent are not applying for or opening new credit card accounts.
Seventy-four percent of recent buyers indicated that they understood the impact a poor credit score can have on getting a good interest rate, but 61 percent know the potential effects of identity fraud on the financing process. Sixty-two percent of future buyers are confident about their credit status, and 60 percent feel financially prepared to buy a home.
To view the complete survey, click here.
