Millennials are the largest generation of homebuyers at this time, but there is a trend that we are seeing in which Millennials are having a harder time getting a good mortgage than their older counterparts. While it’s easy to assume that the reason must be due to wasteful credit spending, the truth is the opposite. Millennials’ credit prudence is at the heart if the issue.
See, with the exception of college loans, Millennials are waiting to buy things until they have the cashed saved up. They watched their parents get underwater financially at times by paying for things on credit and they generally try to avoid making this same mistake.
Finally, when Millennials go to take out a mortgage, which is a reasonable use of credit in their minds, they quickly learn that their lack of credit history is working against them. See, an established credit history is important for getting better mortgage rates.
Millennials are quickly learning that making a purchase on a credit card from time to time and spending a few dollars in interest on a credit card could pay off by saving quite a bit of money with the ability to score a mortgage at a lower rate. For better odds of getting a good rate, Millennials are now being told to strive for at least three active lines of credit in which their balances are low and their available credit is high.
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