New research spotlights renters’ current sentiments around homeownership and the value of Experian’s credit and alternative data in helping to close the homeownership gap
Against the backdrop of significant changes to the mortgage industry, new research from experian, a global data and technology leader, spotlights U.S. renters’ current sentiments around the prospect of homeownership and reveals nearly half (47%) believe they’ll be ready to purchase a home within the next four years. That figure jumps to 67% when looking over the next eight years.
Gen Zers and millennials appear to be the most optimistic about the prospects of homeownership, with 48% of Gen Z non-homeowners and 50% of millennial non-homeowners indicating they’ll be in a position to buy a home by 2029.
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Consumers’ sentiment about the prospects of homeownership come at an interesting time for the mortgage industry, following the Federal Housing Finance Agency (FHFA) and Director Pulte’s recent approval of VantageScore 4.0 for use in mortgage decisions. The more modern scoring model considers rental payments and other forms of alternative data, making it especially beneficial for renters pursuing homeownership who consistently pay their bills on time but may have limited credit histories.
As the first credit reporting agency to include positive rent payments in credit reports and the operator of the industry’s largest rental database, Experian’s data is at the center of this transformation. The growing use of expanded data in mortgage decisions underscores how Experian’s comprehensive, high-quality data assets are helping lenders expand access to homeownership for more consumers.
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“As an industry, we have an important role to play in helping close the homeownership gap and making the dream of owning a home a reality for more consumers, including current renters and younger Americans who represent a powerful segment of future homeowners,” said Michele Bodda, President for Experian Housing, Verification Solutions and Employer Services. “With the adoption of modern tools powered by Experian’s worldclass data assets, including positive rental payments, we can take meaningful steps toward making homeownership more attainable to more consumers more of the time.”
With the addition of alternative data sources, including rental payments available from Experian, VantageScore 4.0 empowers lenders to consider a broader group of consumers during mortgage underwriting and helps create a safer and sounder mortgage market, ultimately making homeownership more accessible for aspiring homebuyers.
In a move to accelerate the adoption of VantageScore 4.0 and make the score more easily accessible and widely available for the mortgage market, Experian recently announced it would be offering the score at no cost to its U.S. mortgage clients. The announcement signified another step in Experian’s mission to support the broader U.S. economy by providing innovative scoring and lending solutions to drive more inclusivity and access to fair and affordable financial resources.
Barriers to homeownership
According to the research, funds for a down payment (67%), home prices (66%) and low credit scores (51%) were cited as the biggest barriers to homeownership for current renters and nearly 40% rate their understanding of financial concepts tied to homeownership as “fair” or below.
While Experian’s latest State of the U.S. Rental Housing Market Report shows roughly 60% of today’s renters have near-prime or better scores, nearly a quarter (23%) say they’ve been denied a mortgage or rental application because of their credit score.
Renters stated the following forms of support would be most useful on their homeownership journey:
- Financial support (61%)
- A clearer understanding of what I can qualify for (51%)
- More financial knowledge about the mortgage process (38%)
“We know today’s renters are hungry for more knowledge, with many turning to friends and family and online resources to improve their understanding of financial concepts,” said Christina Roman, consumer education and advocacy manager at Experian. “Our goal is to be an educational resource and help consumers, including renters who are eager to own a home, improve their financial lives. We have many tools available to support consumers and bring them closer to their dreams of homeownership.”
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Tips for today’s renters
Renters who are thinking about homeownership can take proactive steps today to strengthen their financial profile and build confidence in the process. Those looking to expand their financial knowledge and improve their credit history are encouraged to:
- Sign up for a free Experian membership
Enrolling in a free Experian membership gives you access to tools that can help you monitor your credit, set financial goals and better understand your credit profile. You can check your Experian credit report, receive personalized insights, and get alerts to help stay on top of your financial health and prepare for a mortgage. - Get credit for your rent payments
If you consistently pay rent on time, you may be able to use that history to strengthen your credit profile. Experian Boost®2 is a free feature that allows you to add qualifying rent payments as well as mobile phone, utility and streaming service payments — to your Experian credit report. Alternatively, you can also ask your landlord or property manager to report your rent payments to Experian RentBureau — the largest rental database in the U.S. - Build your financial knowledge
Understanding how credit works is an important part of preparing for homeownership. Experian offers free educational resources like the weekly #CreditChat on Wednesdays at 3 p.m. ET and the Ask Experian blog, which provides answers to common credit questions and tips for improving your financial health.
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Source : businesswire