First, the credit scoring system is complicated for a lot of people and it should be taught in school because it directly affects your adult life. Its also unforgiving in many ways. Even renting a cheap, terrible apartment can be extremely hard. Apartments are the way you start out. Even if you make enough money and pay rent on time every month, your eligibility is determined by a ton of other credit factors that very easily take a hit and are difficult to improve. I know many people who cannot get a place to live strictly because of credit factors unrelated to renting, and even if they have never paid rent late in their life but they have signfiicant credit card or medical debt.
Many people took huge hits to their credit scores during COVID. Even though there were rent freezes and some bills gave leniency, there were many things that were still reported as late, and people fell behind and are still trying to catch up. There’s no erasing the missed payments (aside from waiting x years), and rebuilding after taking hits such as this can take a very long time. Some loans only require 12 months of on time payments, which is helpful but its not that simple all the time.
Since the economy has continued to worsen, people have struggled to catch up. Even those of us who have become current on everything are still looking at poor overall payment histories that were in good shape before the pandemic, as well as collections from that time.
My family specifically is in a decent place financially, even though we are struggling with increased costs just like everybody else. We have been wanting to buy a home, but our biggest barrier to that is credit. As many can attest to, credit can be very unforgiving. For those who have the funds to make a down payment and have the income to qualify, many are being denied for loans because of the effects on their credit during the pandemic that they’re still recovering from, and even if they can get approved, the interest rates are incredibly high. People are finding themselves stuck in a life of renting.
I’m not sure what exactly could be done to help, but I feel that this is an issue that, if addressed, could help the American people establish better lives for themselves. Many of us still paid rent on time every month during the pandemic and to this day, but we’ll be working for years to address the hit our credit ratings took. Maybe we need a restructuring of the credit system or some sort of leniency for problems that occurred during COVID. Payment history has a massive impact on loan eligibility (rightfully so), but crawling out of bad credit can be a nearly impossible task for some, and I think we need to look at the way this impacts hard-working people who are doing everything right but are still stuck. Buying a house should come with requirements to show creditworthiness, but I feel that the specifics they look at often don’t show your true worthiness to pay a mortgage. I work as an apartment manager and I see this quite often. The scoring models are flawed, and it should be looked at.