A knowledge gap, not just the economy, is holding back homebuyers
Millions of Americans may feel like rising home prices prevent them from affording a home, but what if it's really their lack of knowing how to buy a home?
According to credit scoring company FICO, 59% of Americans said in a survey shared with USA TODAY they don't completely understand the steps involved in buying a home, with that figure rising to 64% among first-time homebuyers. Even among prospective homebuyers actively planning to make a purchase, half said they don't fully understand the process. About 1 in 5 Americans, including 1 in 4 prospective homebuyers, also underestimate how significantly credit score affects mortgage rates, believing it has minor or no impact, or they say they aren't sure.
Roadblocks to home buying don't all rest with the economy. Many home buyers have more control than they may think.
"Consumers who are looking to buy homes in the next year are facing real headwinds, primarily citing current interest rates and home prices, but they are not the only challenge," said Jenelle Dito, vice president of FICO's consumer empowerment programs and partnerships, in an email. "A surprising number of potential buyers face knowledge gaps around the homebuying process."
What do potential homebuyers need to know?
One of the first things buyers should know is what their credit score is and then, devise a plan to improve it, financial experts said.
Although 85% of Americans view credit score management as a wealth-building strategy, not just a borrowing tool, about a quarter of them don't know their FICO score, FICO's survey showed.
Lenders use credit scores as one measure to decide whether to approve a loan and on what terms, including interest rate. A high credit score tells lenders you're at a lower risk of defaulting on a mortgage. Most conventional mortgages require homebuyers have a minimum credit score of 620 for approval, but certain first-time homebuyers may qualify for special government-sponsored loans with more lenient approval requirements, according to Equifax.
Despite this, 17% of prospective homebuyers have not taken any steps to improve their credit score ahead of a purchase, the survey showed. More than a quarter also have not encouraged their co-applicant to do the same, it said.
How can potential homebuyers improve their credit scores?
Renters, who make up a significant share of prospective first-time buyers, have ample opportunity everyday to build up their credit score but are often unaware, FICO said.
Half of renters don't know that paying rent on time can help build a person's credit score, the survey showed. More than a quarter said understanding how rent payments may impact credit history would make them feel more prepared to purchase a home.
"It's best to begin monitoring your score at least six months before starting the process, giving you time to make meaningful financial improvements," Dito said. "Actively tracking your financial habits - and identifying where there's room to improve - is an effective way to build your credit and secure better terms with a lender."
Shopping around is also important
Nearly 3 in 5 Americans said they don't completely understand the steps involved in buying a home, and that figure rises to 64% among first-time homebuyers, FICO's survey showed.
"Rate shopping is a perfect example of an activity that many might be confused about but could ultimately lead to big savings," Dito said.
Many homebuyers don't realize multiple mortgage-related credit inquiries within a short window (typically 45 days) are treated as a single inquiry when calculating your score, experts said. So, like for every major purchase, people should shop around for the best terms.
"Shopping around has little to no negative impact-and even a small difference in interest rates can translate into tens of thousands of dollars over the life of a loan, making it well worth the effort," Dito said.
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
This article originally appeared on USA TODAY: A knowledge gap, not just the economy, is holding back homebuyers
Reporting by Medora Lee, USA TODAY / USA TODAY
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This story was originally published July 7, 2026 at 8:00 AM.