Millennials and Home Buying: A Look at Credit Scores

A young 3D woman debt consumer works to build up her credit scorAs the millennial generation continues to head-butt its way into the housing market, credit scores are creating a sizable burden on their ability to purchase a home.  A recent Rent.com survey stated that 78% of the millennial generation renters do not plan on buying a home soon.

Many cite the benefits of renting as their mainstay against home buying.  However, in a recent TransUnion survey, 43% of those aged 18-34 blame subpar credit scores.

So why aren’t millennials buying houses?

Inability to obtain a fair mortgage and a general disinterest in buying.  Credit score is the biggest hurdle for the younger generation, as most mortgages have a minimum requirement of credit score.

TransUnion found that one third of adults aged 18 to 34 have a credit score in between 300 and 600. A credit score of 620 will score you a mortgage, but anything lower is a crapshoot.

On average, millennials have a shorter credit history, which means there is more gravity in a missed payment as opposed to an older home buyer.  Millennials do not have the cushion of a long credit history, so their mistakes are more prominent, resulting in lower scores.

Another thicket to cut through is the initial cost; the down payment.  TransUnion found that nearly 60% of consumers aged 18-34 worry about obtaining a down payment.  Coupled with lower credit scores, the task becomes daunting, forcing millennials to stay renting.

It will be interesting to see how the housing market adjusts to masses of millennials renting, and putting off their first home purchase.

Will home prices come down to make up for missed capital or will rents skyrocket and force millennials to reconsider?

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Managing Applications Online

Long gone are the days of multiple hard-copy applications and burdensome, time-consuming vetting processes. Multiple online services have now made the application process a breeze for landlords.

The top benefits of managing applications online:

  1. Generate More Applicants

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Online applications are easily shareable and can be posted on a multitude of social media channels. Connect with tech-savvy, young consumers who are accustomed to using the internet. As a landlord, the more applicants you are able to easily generate, the more comfortable you will be with the tenant you accept.

  1. Save Time and Be Organized

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Life is much easier for a landlord who doesn’t have to print, mail, deliver and sort through hard-copy applications. Instead, digital applications are neatly organized in a single, easily accessible place.

  1. Security

1Sensitive information from hopeful applicants will be stored in a secure location, yet can still be easily accessed by landlords on the go. For applicants, this means peace of mind that only the correct people who are legally able to see their information actually do.

As a caveat, landlords will want to review the online application form of choice and what specific information is being collected. Rental Beast offers landlords a thorough application process with checks conducted directly through TransUnion.

It is also recommended that landlords reach out to applicants prior to filling out the online application. Submitting a substantial amount of personal information can be off-putting to some renters and can, therefore, lead to a lack of pertinent or comprehensive data.

4. Be Kept in the Loop as an Agent

1On Rental Beast’s unique application platform, agents are able to stay informed regarding where a client’s application stands in the process. While an agent won’t be able to access or see a client’s personal information (only the landlord will), he or she will remain a party to the entire process and won’t be kept in the dark.