Many Underestimate Importance of Credit Rating

Good credit is as important a step to homeownership as there is. Without it, even your renting options can be extremely limited.

Yet half of Americans don’t fully understand the effect bad credit has on their chances to qualify for a home loan, according to the 1999 Fannie Mae National Housing survey.

When trying to qualify for a loan, half of all adults believe late payments are “a minor problem or no problem at all.” Only two out of five residents know that routine late bill payments are a major problem when applying for a mortgage.

With current barriers to homeownership--including mortgage rates and joblessness--at all-time lows, an ignorance of what role credit plays in the mortgage process is cropping up as a new obstacle to homeownership, the survey found.

“The high percentage of Americans who don’t connect paying bills late with the potential for problems later when they try qualifying for a mortgage is a new and very disturbing trend, and we must find ways of reversing it,” said Franklin D. Raines, Fannie Mae chairman and CEO.

The survey also found good news. Only 10% of recent borrowers found the mortgage process to be “very to fairly difficult,” and more than half said they “were in control” of the lending process--not the lender.