A lot of potential home buyers, especially first time home buyers, are holding off on taking the mortgage plunge, in hopes they can get a better rate once they improve their credit scores. 34% of prospective buyers say their credit score might hurt their ability to purchase a home and that 45% have delayed a purchase to improve their credit score.
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. 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.
According to Experian, low credit scores seem to be the reason that 1 in 5 have opted out of the loan process or are now likely not to purchase a home at all for the next five to 10 years. On the upside, Experian found that almost 70% of respondents are paying their bills on time, while 60% are paying off debt. Additionally, 28% of future home buyers are keeping balances low on credit cards, while 15% are taking steps to protect their credit information from identity theft and fraud.
If buying a new home is in your future plans, you should be checking your credit regularly, not only so that you can identify areas of improvement, but also to make sure everything on your credit reports is accurate. You can generally improve your credit score by paying down high credit card balances, disputing errors on your credit reports and making all loan payments on time.
