The U.S. real estate market has cooled significantly as housing affordability withers in the face of rising interest rates and historically high home costs. Consumers, as a result, are losing faith in their ability to afford a home of their own. According to CreditXpert, however, this may not be true for most consumers. The company's analysis of more than 20M credit pulls in the last 12 months suggests that four key misperceptions stymie the dream of homeownership for many. 

"The quickly changing mortgage and housing markets are dominating national headlines with tales of homeownership being out of reach for millions.  Sadly, many prospective homeowners lack the knowledge they need to navigate complex and rapidly changing financial products like mortgages," said Mike Darne, Vice President of Marketing for CreditXpert. "The truth is that there are concrete things prospective homebuyers can do to help neutralize the impact of rising rates and home prices."

Darne said these four misperceptions about credit are holding many applicants back:

"Consumer" v. "Mortgage" Credit Scores. Most consumers don't know that lenders use different credit scores for different types of loans.  Those that consumers regularly monitor are likely more aligned with typical consumer loans, like credit cards. Given that mortgages are for much larger amounts, are secured by their home and are repaid over a much longer period of time, credit scores used by mortgage lenders use variables that reflect these differences. 

Mortgage loan applicants must live with the credit score their mortgage lender shows them. Not so. Applying for a mortgage can be intimidating. Most applicants don't know what they don't know and end up accepting the credit score they're given. Yet it's important for applicants and lenders to work toward optimizing credit scores because credit scores drive the interest rate, the payment and the loan product applicants are offered. 

Improving mortgage credit scores takes a long time. Not necessarily, and not for most consumers. Most applicants will take quick, simple actions to improve their score while their mortgage loan is being processed. For the 12 months ending June 30, 2022, data show that 73% of those with scores below 760 could improve their score by at least 20 points within a 30-day timeframe, well within the typical mortgage origination cycle. 

Improving credit scores won't have much impact on affordability. Not so. Credit scores are the 'quickly actionable' variable in mortgage loan approval. Higher credit scores often translate to lower loan rates, lower private mortgage insurance (PMI) costs and better loan products. Lowering mortgage payments by even $100 per month substantially reduces total interest costs over the life of a loan.  Doing so also increases affordability.

The truth is that many would-be homebuyers who believe they have been priced out of the housing market may actually qualify for a mortgage when these misperceptions are cleared up and they take simple steps to better their credit scores. 

"Our data show that millions of Americans have the potential for more affordable mortgage financing. Lenders can show them how with a one-page report," concluded Darne. 

About CreditXpert

CreditXpert was founded in 2001 with a mission to make homeownership more accessible and affordable to all. The company's predictive analytics platform helps mortgage originators, and their applicants realize the credit score potential for applicants by generating a highly accurate and detailed action plan. Since its founding, CreditXpert's platform has analyzed nearly 1 billion credit records. Today, most of the top 10 mortgage originators and more than 60,000 mortgage professionals leverage the company's platform. Learn more at http://www.creditxpert.com. 

CreditXpert action plans are tools meant to educate mortgage professionals and prospective consumer loan applicants and are not furnished for the purpose of improving an applicant's credit record, credit history or credit rating, or removing or modifying adverse, inaccurate, fraudulent, or other information in an applicant's credit record. CreditXpert is not a credit counseling, credit repair, or credit reporting agency. Credit scores and score changes from CreditXpert are estimates, and will likely differ from credit score information used by mortgage professionals to assess loan eligibility. CreditXpert does not guarantee that scores from any other company will change by the same amount, in the same way, or at all. 

Contact: Mike Darne, 703-896-0344

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