A credit score impacts how much a home buyer can afford, what interest rate they’ll lock in — and whether they’ll qualify to buy a home at all. But the average American doesn’t understand what causes their credit score to change, a recent survey1 fielded by Zillow shows.

Home shopping season is just around the corner, and low mortgage rates make it a great time to buy. But before potential buyers begin their home-hunting journey, they should understand what impacts their credit score and how it affects their buying power and budget, according to a Zillow news release.

Quiz Takers

Quiz takers were most likely (67%) to correctly answer that investments in the stock market do not typically affect their credit scores. Less than half (47%) correctly answered that credit scores can affect your mortgage until the day you close, and just 41% knew that you should wait at least six months after taking out a car loan before applying for a mortgage.

The struggle to understand what affects credit scores, especially as it relates to home buying, wasn’t limited to younger Americans, who may have less experience building and using credit.



% of Respondents with 3+ correct answers

Gen Z 






Generation X



Baby Boomers/Silent Generation



A strong credit profile plays an important role when trying to qualify for a home loan, and will factor into the type of loan and rate a lender can offer, the news release added.

A higher credit score will lead to lower interest rates, which can save thousands of dollars over the life of a loan and hundreds of dollars a month in some markets. The lower the credit score, the less favorable the terms, if the loan is approved at all. Zillow’s research found a borrower with a “fair” credit score could pay 7 percent more over the life of a 30-year mortgage for the same home as an otherwise identical borrower with an “excellent” score.

“Lenders rely on credit scores as a key element of a borrower’s overall financial profile. Understanding your credit score and what affects it will make your mortgage process go much smoother,” said Jonathan Lee, Zillow Home Loans senior director, mortgage sales in the news release. “Once pre-approved by your lender, it’s important to avoid new credit inquiries and taking on new debts before your loan closing. Any changes to your credit score can lead to delays and in some cases even disqualify you for your home loan. That plush new sectional may have to wait until after you close.”

Spring Season

The spring shopping season — historically when most houses are put up for sale — will likely be one for the record books. A ‘perfect storm’ of extreme demand will coincide with more widespread vaccine distribution that surveys show will make folks more comfortable listing their homes. Mortgage rates are still historically low but have ticked up recently — buyers will be motivated to lock in soon, the news release added.

As shoppers begin their buying journey, they would be wise to check their credit score and take steps to improve their credit if they can. That includes always making at least minimum payments, reducing balances, keeping an old account or two, and checking credit reports for any mistakes.

Despite these survey results, credit scores of homebuyers — including those purchasing their first homes — have risen dramatically over the past 15 years.

recent report from the NY Fed’s Center for Microeconomic Data shows that median credit scores for mortgages of first-time homebuyers ended 2020 at around 740. This is a far higher average than credit scores that hovered between 680 and 700 from 2002-2007, in the run-up to the mortgage crisis and the Great Recession, the news release said.

Source: Zillow

Survey Methodology: Zillow Group Population Science collected a nationally representative sample of more than 2,000 Americans. Fielded between February 11 and February 19, 2021, the survey asked participants questions about their comfort and likelihood to adopt new technologies in-home shopping. The survey also tested participants’ knowledge of credit scores. To achieve national representativeness, quotas for age, education, sex, region, race, income, and marital status limited oversampling of any given demographic group. In addition to quotas, Zillow used statistical raking to weight the sample to the US Census Bureau American Community Survey 2019 sample of adults.