1
EDELMAN
Experian Home BuyingSurvey Report
March 2016
2 Intelligent Engagement© Copyright 2016 Daniel J Edelman Inc.
WHO HOW MANY ACCURACY WHEN HOW
Home Buyers(Purchased
within the past year or plan to purchase in the
next year)
n=500(250 Recent, 250 Future
Home Buyers)
Margin of Error =
± 4.4%
(± 6.2% for each audience)
Data Collection Occurred
February 19-24, 2016
Online Survey
RESEARCH OBJECTIVE: To garner media-genic research around home buyers’ attitudes toward credit scores,
financial responsibility and the purchase process
Research Methodology
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Key Findings
Home buyers appreciate
the importance of
credit, and they consider it a “valuable tool” rather
than a “necessary
evil” for major
purchases.
One in five homebuyers is likely to
“opt out” of home
ownership in the next 5-10 years, driven
by a desire for more
flexibility or to carry less
debt.
First-time future home buyers are especially
worried about their credit, but many do
not know what steps
they can take to qualify for a better home
loan.
Recent home buyers are
more aware of the value of credit – and
monitor their credit more often – after
going through the home
buying process.
OVERALL RESULTS
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Q7: To what extent do you agree or disagree with the following statements? (Shown: Top 2 Box, Agree)Q7a: Which of the following statements comes closest to your opinion... Credit is a VALUABLE TOOL or a NECESSARY EVIL for making major purchasesQ8: In your opinion, how important is one’s credit score in purchasing a home? (Shown: Top 2 Box, Important)
Buyers recognize that credit plays a critical role in purchasing a home and qualifying for home loans
93%Say that one’s credit score is important in purchasing a
home
74%See credit as a
“valuable tool,” not a
“necessary evil” for making major purchases
48%Are working to improve their
credit to qualify for a better home
loan rate
See Credit as aVALUABLE TOOL
Working to IMPROVE CREDIT
54% ofFUTUREBUYERS
Credit Impact onHOME BUYING
90% Men vs.95% Women
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Q13b: Have you ever been denied for a home loan for any of the following reasons?Q13c: Has your credit score ever negatively impacted your ability to get a home loan?
Poor credit historyOutstanding debt
Limited credit historyInsufficient incomeInsufficient assets
Employment issuesUnable to verify income
A spouse’s poor credit historyA spouse’s limited credit history
Unable to verify assets
16%12%
10%10%
7%5%5%4%
4%3%
Reasons for Being Denied a Home Loan
Poor credit history is the top reason why home buyers report getting denied for a home loan
19% SAY THAT THEIR OWN CREDIT SCORE has negatively impacted their ability to get a home loan8% SAY THATA SPOUSE’S CREDIT SCORE has negatively impacted their ability to get a home loan
15% Ages 18-34
8% Ages 18-349% Men
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39% 40%
61%
41%
26%
73%
24%17%
72%
Home Buyer Perceptions by Age
Ages 18-34 Ages 35-54 Ages 55+
Younger home buyers’ purchasing is more limited by the types of loans that they are able to qualify for
Q7: To what extent do you agree or disagree with the following statements? (Shown: Top 2 Box, Agree)
8 Intelligent Engagement© Copyright 2016 Daniel J Edelman Inc.
I was / am worried my credit sta-tus might hurt my ability to pur-
chase a home
I am concerned that my credit score doesn’t qualify for the best
home loan rate
I felt / feel prepared financially to purchase a home
34% 32%
72%
43% 47% 50%
Impact of Knowing Credit Score on Home Buyer Per-ceptions
Know Credit Score Do Not Know Credit Score
Knowing one’s credit score remains important to building confidence during the home buying process
Q7: To what extent do you agree or disagree with the following statements? (Shown: Top 2 Box, Agree; Shown among those who know their credit score, n=388 and those who do not n=70)
9 Intelligent Engagement© Copyright 2016 Daniel J Edelman Inc.
Q4: Within the past year, have you passed any of the following life milestones? (Shown: Among Total, n=500)Q5: And in the next 12 months, do you plan to pass any of the following life milestones? (Shown: Among Total, n=500))
Buyers also recognize the impact of credit when refinancing a home
65%Agree their credit score affects the interest rate to
refinance a home
16%Have refinanced in the past year or plan to in the
year ahead
Credit Impact onREFINANCING
Recent / PlannedREFINANCING
21% of RECENT BUYERS
60% 1st Time Buyer vs.71% Experienced Buyer
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Q14c. How likely are you to opt-out of home ownership in the next 5-10 years? Q14d: Which, if any, of the following reasons describe why you might opt-out of home ownership in the next 5-10 years? (Shown: Among those likely to opt out, n=97)
Some are already considering opting out of home ownership for more flexibility and to carry less debt
Want more flexibility to relocate
Do not want to carry as much debt
Want to invest in something else
Do not want the responsibility of maintaining a home
49%
36%
35%
26%
Reasons to Opt-Out of Homeownership
(Shown: Among those likely to opt-out in 5-10 years)19% of ALL HOME
BUYERS are likely to choose not to own a home
in the next 5-10 years
Opting Out ofHOME OWNERSHIP
24%Ages18-34
FUTURE HOME BUYERS’
EXPERIENCE
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Q7: To what extent do you agree or disagree with the following statements? (Shown: Top 2 Box, Agree; Among future buyers, n=250)
Future first-time buyers are especially concerned about their credit and its impact on their purchase ability
59% ofFUTURE BUYERSfeel financially
prepared to buy a home
34% of FUTURE BUYERSsay their credit might hurt their
ability to purchase a home
59% ofFUTURE BUYERS
are confident about their credit
status
Future BuyerCREDIT CONFIDENCE
Future BuyerPREPAREDNESS
Future BuyerCREDIT CONCERNS
51% 1st Time Buyer vs.68% Experienced Buyer
50% 1st Time Buyer vs.69% Experienced Buyer
41% 1st Time Buyer vs.26% Experienced Buyer
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Q7: To what extent do you agree or disagree with the following statements? (Shown: Top 2 Box, Agree; Among future buyers, n=250)Q8: Which of the following activities are you MOST focused on to improve your credit? (Shown: Among those working to improve their credit, n=238)
Paying bills on time
Paying off debt
Keeping balances low on credit cards
Protecting credit info from fraud and identity theft
Not applying for / opening new credit accounts
68%
60%
28%
15%
11%
Future Buyer Credit Building Activities
(Shown: Top 2 Choices Among those working to
improve their Credit)
54%
of FUTURE BUYERS are working to improve their credit to qualify for a better home loan rate, but
35%
of FUTURE BUYERS say they do not know what steps to take to qualify for a larger loan
Some future buyers are working to build their credit, but many first-time buyers do not know how to start
43% 1st Time Buyer vs.26% Experienced Buyer
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Q6: Have you already been pre-approved for a loan for your next home purchase? (Shown: Among future buyers, n=250)Q7: To what extent do you agree or disagree with the following statements? (Shown: Top 2 Box, Agree; Among future buyers, n=250)
Many future buyers have delayed a purchase to improve their credit, and most are not pre-approved
Future BuyerLOAN PRE-APPROVAL
Future BuyerPURCHASE DELAY
Future BuyerLOAN RATE CONCERNS
38% ofFUTURE BUYERSare concerned
their credit score doesn’t qualify
for the best home loan rate
45% ofFUTURE BUYERS
delayed a purchase to
improve their credit to get
better interest rates
76%Not Pre-approve
d
55% 1st Time Buyer vs.31% Experienced Buyer
49% 1st Time Buyer vs.27% Experienced Buyer
RECENT HOME BUYERS’
EXPERIENCE
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54%My credit score was HIGHER than I expected
58%I felt MORE CONFIDENT in my understanding of the kind of loan I was eligible for
18%My credit score was LOWER than I expected
25%I was SURPRISED by my credit score
Q10: Did you, yourself, check your credit report or credit score at any point in the home buying process? (Asked of recent buyers, n=250)Q12: Which of the following, if any, applied to you? (Shown: Among recent buyers who checked their credit score in the process of purchasing a home, n=197)Q13A: After learning your credit score, were you more or less confident in your understanding of what kind of home loan you would be eligible for? (Shown: Among recent buyers who checked their credit score in the process of purchasing a home, n=197)
Recent home buyers that checked their credit score felt more confident after doing so
Recent BuyerCREDIT CHECKING Credit Reactions
(Shown: Among those that checked their credit)
51%
28%21%
When first considered purchasingLater
NET 79% of RECENT
BUYERSchecked their
credit37%
Ages 55+
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Q13d: After purchasing a home, do you consider access to credit to be more valuable or less valuable than you did before you had purchased a home? (Asked of recent home buyers, n=250)Q13e: And how, if at all, has purchasing a home affected how you use credit? (Asked of recent home buyers n=250)
After purchasing, homeowners become more cognizant of their credit
I monitor my credit more often
I am wary of taking on more debt
I use credit cards less often
I use fewer credit cards / cancelled a credit card
I enrolled in a credit monitoring service
38%
29%
24%
16%
16%
NET 72%HOME
BUYING HAS HAD
AN IMPACT ON CREDIT
USAGE BEHAVIORS_____________NET 81%
AGES 18-34
Recent BuyerIMPACT ON CREDIT PERCEPTIONS
Recent BuyerIMPACT ON CREDIT BEHAVIORS
60%
36%
4%
More valuable No impactLess valuable
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Difficulty securing a loan Difficulty getting a good interest rate
Difficulty getting a loan large enough to suit
one's needs
Requiring a co-signer
76% 82%72% 68%73%
62% 56% 54%
Recent Home Buyer Impact Perceptions
Poor Credit Identity Fraud
Q9: In which of the following ways do you think having a poor credit status could affect a potential home buyer? (Shown: Among recent buyers, n=250)Q13: In which of the following ways do you think a victim of identify fraud could be affected when buying a home? (Shown: Among recent buyers, n=250)
Recent buyers recognize the impact of poor credit, but fewer understand the effects of identity fraud
-20 -16 -14
Difficulty securing a loan Difficulty getting a good interest rate
Difficulty getting a loan large enough to suit
one's needs
Requiring a co-signer
APPENDIX
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Category Subcategory %
Home Purchase
Future Buyer 50%Recent Buyer 50%
GenderMale 43%
Female 57%
Age18-34 41%35-54 34%55+ 25%
Region
Northeast 27%South 27%West 20%
Midwest 26%
Race / Ethnicity
White 81%African American 6%
Hispanic 6%Asian American 4%
Other 3%
Category Subcategory %
Know Credit ScoreYes 78%No 14%
Unsure 8%
Credit Score
Exceptional 21%Very Good 31%
Good 18%Average 17%
Poor 12%
Education
HS or less 14%Some college 31%
College graduate 37%Graduate school 17%
Household Income
<$25K 10%$25K-<$50K 26%$50K-<$75K 29%
$75K-<$100K 15%$100K+ 17%
Demographics
Respondent Demographics
Totals may not add up to 100 due to rounding
Thank you