Low credit scores have be burdening many Millennials, and preventing them from buying a home, according to a survey by TransUnion.
The survey showed that 32% of Millennials plan to buy a home in the next 12 months, however 43% currently hold a subprime credit score.
On the other hand, older generations plans to purchase their home is more aligned with their finances, as 17% of those ages 35-54 plan on buying a home within the next year, which is the same percentage of that age group that has a super prime credit score.
TransUnion Senior Vice President Ken Chaplin gave these tips to help Millennials improve their credit:
1. Check your credit report first
Chaplin suggests checking one’s credit report three months before starting the home buying process to ensure that your score is in a healthy range.
2. Start planning early
Because building credit can take a while, Chaplin suggests that future home buyers keep an eye on their credit, and how their spending affects it.
3. Build credit
Building credit is necessary, and can be done through paying your bills on time, maintaining a low credit utilization ratio and factoring existing payments such as student loans and rent into your report.
4. Set realistic goals
The more money put down on a home, they lower the monthly mortgage payment will be, however homebuyers should not plan to put down more than they can afford, according to Chaplin. Homebuyers should also remember to factor closing costs into their budget.
5. Do your homework
Homebuyers should research mortgage rates to see if the rate they are offered is competitive.
6. Keep an open mind
Although building credit and preparing finances may take time, Chaplin said future homebuyers should have patience and be willing to delay homeownership, rather than give it up.
If seeking to improve their credit scores, Millennials can check out these tips from Experian on the fastest ways to improve credit scores.