A recent study points to the importance of advising clients on the impact credit scores have on attaining a mortgage – especially for millennial home buyers.
The study by CFA, an American non-profit consumer organization, found that participants aged 18-34 know less about how credit is scored and what effects their actions will have on their score.
It’s an issue many brokers face when trying to advise clients on the importance of maintaining their credit score.
“Usually if someone is looking to buy we can take three to four months to repair their credit,” Joe Walsh of Dominion Lending Centres Bedrock Financial told MortgageBrokerNews.ca. “I tell clients they should try not to bring their credit to its limit and to keep it around the mid-mark.
Also, the number of credit items can have an effect as well; they can close some credit if they aren’t using it.”
However, although Walsh has experienced some push-back from clients who are unwilling to work on their own credit, he says younger buyers are often the easiest cases.
“Trying to work with someone who is younger and is just coming into credit is easiest,” he said. “It’s an uphill battle for those who have struggled with it for 15 to 20 years.”
According to the study:
- Well over four-fifths know that credit card issuers (88%) and mortgage lenders (87%) might use these scores.
- Well over four-fifths know that missed payments (92%), personal bankruptcy (87%), and high credit card balances (87%) are factors used to calculate credit scores.
- Nearly three-quarters (72%) know that they have more than one generic credit score.
- Nearly three-quarters (72%) know that the three main credit bureaus – Experian, Equifax, and TransUnion – collect the information on which credit scores are most frequently based.
- Nearly three-quarters (72%) know that it is very important to check the accuracy of one’s credit reports at the three credit bureaus.