A recent survey from TransUnion reveals a majority of those planning on or considering buying a home in the next 12 to 18 months are unsure about actions that could help improve their credit score. A majority was also unsure about what their credit score directly affects in the home financing process.
The national consumer survey found that while nearly three out of four (74 percent) potential home buyers believe it’s important to check the accuracy of their credit report, only 45 percent or fewer correctly understand that their credit score measures the amount of debt they hold, risk of not repaying back a loan, or the financial resources they have to pay back loans.
Despite the fact a majority of consumers recognized the importance of a credit score, one in three incorrectly thought increasing their income (33 percent) or closing old accounts (28 percent) before applying for a mortgage has the potential to help improve their credit score.
While 76 percent of prospective home buyers surveyed were at least somewhat confident (38 percent very confident; 38 percent somewhat confident) that they understand the finance process and the terms of their home loan, many were unable to identify the specific factors that a credit score affects in the home buying process. Only half of respondents correctly identified what a credit score affects, including interest rate (52 percent), the amount they can borrow (53 percent) and their mortgage lending terms (50 percent).
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