Credit access is often a significant barrier to homeownership. According to a report from LendingTree, Generation X homeowners have a higher credit rating in general than Gen X renters, homeowners have a median credit score of 672, compared to 586 for non-homeowners.
“This is not surprising, as higher scores make homeownership more accessible,” said LendingTree Chief Economist Tendayi Kapfidze. “On-time mortgage payments also boost credit scores beginning about a year after the home purchase.”
In addition, homeowners are able to obtain more credit accounts than non-homeowners. According to LendingTree, homeowners have a median of nine financial accounts compared to just four for non-homeowners. Renters were also more likely to be behind on payments, with renters being behind on 4.2% of all payments over four years, with homeowners late on just 2.3% of payments. Kapfidze notes that late payments are the largest drivers of the difference in average scores between homeowners and renters, stating that though homeowners carry far larger balances, they are using a lower proportion of their available credit—in part reflecting their better access to credit.
Renters also have more trouble servicing their debt, with an average of 10 negative marks on their credit profiles to just four for homeowners. 87% of renters have at least one late payment compared to 55% of homeowners. However, Homeowners owed more on average, nearly half of all homeowners, 40% hold personal loans, and owe a median amount of $11,482, while 32% of renters hold personal loans, owing a median of $4,774.
Generation X homeowners and renters are roughly even on owed student loan debt. 28% of homeowners owe a median of $28,557, while 27% of renters are carrying student loans with a median of $28,203.
For younger buyers, student loans are still a drag on the housing market. In an article published by Business Insider, Gluskin Sheff's Chief Economist & Strategist discusses how high levels of student loan debt are locking many potential buyers out of the market.
“The lack of opportunity has led to the share of 'kids' between the ages of 25 and 34 that are living at home rising to 17% from 12% a decade ago,” Rosenberg said. He also noted how the weight of student loan debt across the country has had a negative impact on marriage and fertility rates, as well as enrollment in post-secondary school, leading to slower household formation.