Most potential millennial home buyers might struggle to get their first homes. First-time buyers are facing even deeper financially instability than the previous generations. Some millennials have discouraging debt-to-income ratios. This affects the interest rates that they can get. Does a bad credit score prevent a millennial from purchasing a real estate property?
What Is a Credit Report?
A client’s credit report is the fundamental report on which money lenders assess whether they should grant a loan. The designated bureaus for credit reporting collect data about an individual’s credit history, and they archive this history for years. However, they give more attention to the last 24 months.
Why Are Credit Scores so Important in Real Estate?
A good credit score track record can determine your job, house rental, and loan considerations. A client’s credit score can come in handy for a real estate agent to determine the types of property the client can afford. With the aid of the credit score, an agent will be able to weigh options objectively.
How Can a Millennial Improve a Bad Credit Score?
The common combination of low income, high debt, and bad credit creates challenges for a typical millennial. The best advice to improve a credit score is to pay off any credit debts. Settle the debts with the most interest, first. Paying off debt should come before making down payments for a property. Only after paying off debt should you save as much down payment as possible. Additionally, clearing previous debts relieves you of the mental stress of expenses. Make sure that you clear your previous debts, before you look into buying a home.
Millennials face many hurdles today. These include student loan debt, the inability to save for an adequate down payment, and fear of the real estate market. That is why proper financial management is key.