It is not a new revelation that the Hispanic community has lower credit scores compared to other demographics, but how is this affecting their opportunities to become homeowners?
The Wall Street Journal released these numbers in a recent article following a new Federal Reserve Report:
- In 2006, 29% of Hispanic borrowers had credit scores that were below 620 (compared to 15% of white borrowers).
- From 2006 to 2014, the percentage of borrowers with scores below 620 fell. In 2014, roughly 12% of Hispanic borrowers had scores below 620 (compared to 5% of white borrowers).
- As a share of home purchase originations, Hispanic borrowers with scores between 580 and 619 fell to 0.6% of mortgages extended in 2014, down from 1.5% in 2006.
The report quotes Fed economists Neil Bhutta and Daniel Ringo, stating that that the tighter credit conditions since 2006 have “had a disproportionate effect on minorities’ credit access.”
Yesterday, we mentioned that one of the challenges that the Hispanic community is facing is their low credit scores. Today, based on the numbers above, we can see the consequences of low credit scores; the opportunities for Hispanics to become homeowners have shrunk. Don’t allow your low credit score to stop you from reaching your dream of homeownership!
MyFICO has a lot of good tips that can help you improve your credit. Here are 3 to start with:
- Check your credit report – review your report and see if there are errors. They recommend making sure that there are no late payments incorrectly listed, and that the amounts owed for each open account are correct.
- Setup payment reminders – don’t be late! They state that “making a payment on time is one of the biggest contributing factors to your credit score.”
- Reduce the amount of debt you owe – they recommend using your credit report to make a list of all your accounts, and then checking any recent statements to determine how much you owe on each account, as well as what interest rate they are charging you. Then, come up with a payment plan (put most of your budget toward paying off the credit cards with the highest interest first).
If you would like your family to enjoy living in a home of its own, sometimes a few sacrifices must be made. If you would like help achieving this goal, contact your local real estate professional and create a plan to improve your credit score!