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Home Buyers Uncertain About How a Credit Score Affects Financing Process

TransUnion survey reveals majority of people know a credit score is important, yet are unsure how it impacts home buying

As Americans enter the peak time of year to buy a home, 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%) 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.

“As many people across the nation prepare to take advantage of still-low interest rates and look to buy a home, it’s essential they understand their credit score before applying for a mortgage,” said Ken Chaplin, senior vice president at TransUnion.

Despite the fact a majority of consumers recognized the importance of a credit score, one in three incorrectly thought increasing their income (33%) or closing old accounts (28%) 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% very confident; 38% 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%), the amount they can borrow (53%) and their mortgage lending terms (50%).


Ken Chaplin, senior vice president at TransUnion
“Leading up to a home purchase is a particularly important time to check and understand your credit score, as it affects lending rates and mortgage terms. At TransUnion, we recommend prospective home buyers begin regularly checking their score at least three months before securing a mortgage in order to maximize their potential for the best financing options.”
Ken Chaplin, senior vice president at TransUnion

According to the survey, just 22 percent of people correctly identified that they should check their credit score during the three months leading up to a mortgage application. In contrast, nearly one-third (29%) of people surveyed believed one month before purchasing a home was a good timeframe to check credit scores. However, a one-month timeframe gives consumers little time to take action if they discover fraudulent activity like identity theft or old, unpaid credit card debt that could negatively affect their score.

To help people better protect their identity and credit, TransUnion offers a credit monitoring tool with a new feature: Instant Credit Alerts. Through these alerts, users will automatically get an email when a creditor requests their TransUnion credit report as part of a credit application.

To coincide with spring, historically the most popular time to buy a home, TransUnion shares the following tips for those preparing to take out a mortgage:

  • Start with your credit report. Make sure it’s as accurate as possible, that your scores are where you want them to be, and that no one else has access to your credit.
  • Do your homework. Research loans, rates and brokers before you sign anything. Doing this work now will pay off later with a better rate and terms.
  • Be realistic on what you can afford. The larger your down payment, the wider your options. Putting more money down, up front, will help ensure you pay less each month.
  • “Not now” doesn’t mean “never.” If home ownership isn’t a realistic option for you right now, that doesn’t mean it won’t be in the future. When it comes to a major purchase like a home, timing is critical.

For more information about TransUnion’s credit monitoring tool, please visit:

About the Survey

The survey was conducted online by Toluna Analytics between April 7 and April 13, 2015. The survey included responses from 1,008 Americans, ages 18 to 64, who plan to purchase a home or are considering purchasing a home within 12-18 months.

About TransUnion

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

We call this Information for GoodSM