Worry about credit is a major barrier to mortgage applications, with 70% of people worried they won’t be able to buy a home because of their credit score, according to data from mortgage broker platform Haysto.
The survey says, “Fear of credit scores keeps people from making their dream of buying a home a reality.”
He adds that just over one in five, or 22%, of potential homeowners say they were turned down for a mortgage because of their bad credit history.
More than a quarter of consumers, 29%, say they don’t believe their credit score is ‘good’ or ‘excellent’, while 11% have no idea what their credit score is.
Haysto co-founder Paul Coss says, “There are all sorts of reasons why people miss monthly payments and get labeled as ‘bad credit’. This past year has thrown many curveballs into the mix – from furlough to layoff – with many people taking home less money and possibly missing monthly payments. That’s not to say they aren’t trustworthy and should be penalized for years to come.
Coss adds: “Some banks and mortgage brokers will make you feel like a bad person when they refuse to give you a mortgage. Automated Online Mortgage Advisors will not judge for themselves. It’s a case of: Bad credit means the computer says “No.” But even if you have bad credit, you can still get a mortgage. You will simply have fewer options available to you than if you had a perfect credit score.
The pandemic has beleaguered the economy since last March, with thousands of workers furloughed, straining household budgets.
Earlier this month, Bank of England Governor Andrew Bailey predicted that the UK the economy is expected to shrink by 4.2%t in the first three months of the year, amid tighter lockdown restrictions to slow the spread of the virus.
But the governor expects a rebound this spring as consumer confidence returns, thanks to the country’s rapid vaccination program against Covid-19.
The Haysto survey interviewed 2,012 UK adults.