A new analysis of data by a real estate database has found that bad credit scores are stopping nearly one-third of Americans from being approved for a mortgage.
Zillow is a real estate and mortgage database that handles thousands of requests for home loan quotes. For over 25,000 people applying online, any borrower with a score less than 620 was unlikely to receive even one quote – even if their down payment was exceedingly high.
According to data from FICO, that means 29.3 percent of Americans officially have credit bad enough to mean they’re not qualified. Another study by FICO looked at scores below 600, estimating 43.4 million people, or 25.5 percent of the population, to fall into the “bad credit” category.
Even if a borrower is closed out of a mortgage because of bad credit, it’s likely that they’re pre-approved for a car loan. By obtaining a loan and making the monthly payments on time, a consumer can begin to raise their credit score back up to the point where a mortgage becomes a possibility.