According to a survey conducted by FreeScore.com, consumers place the most trust in banks, slightly more than credit unions, when seeking a mortgage. Each is trusted far more than other lender types, such as government institutions, by consumers shopping for a mortgage. Results revealed that approximately one in three respondents trusted banks the most, and less than one in three trusted credit unions most. Surprisingly, the study also revealed that 22 percent of consumers did not know any of their credit scores before applying for a home loan.
Mortgage bankers and government lending institutions were least trusted by consumers, with less than one in 10 survey respondents showing preference for these lender types. Ironically, a majority of banks and credit unions ultimately sell most, if not all, of their loans to Fannie Mae or Freddie Mac. However, most consumers are unaware of this, and tend to view whichever entity took their initial loan application as the actual lender—be it the bank, credit union, or government agency.
A telling statistic gauging sentiment was that slightly more than 20 percent of respondents selected “None of the Above” as an option when asked to choose which entity they preferred to deal with for a loan, be it banks, mortgage brokers or credit unions. As a result of the defaults and foreclosures, many affected borrowers saw their credit scores drop sharply.
“While trust of lenders is a factor, consumers must approach lenders prepared. It means knowing your credit scores before you seek a mortgage," said Carrie Coghill, director of consumer education for FreeScore.com. "Knowing your credit scores and information is key to understanding if you qualify for the best rates. Further, consumers have three credit scores, one from each of the national credit bureaus—TransUnion, Experian and Equifax. Given this, it is imperative consumers check and monitor all three scores, in addition to ensuring their credit information from each of the bureaus is correct. It takes just one bad score for a lender to reject a loan. Misinformation in your credit report can also impede your ability to secure a better rate. So, before you trust a lender, put trust in yourself first to know your financial situation."
Results of the survery are as follows:
Q. If you were applying for a home loan, which type of institution do you trust the most?
Credit union: 30.65%
Mortgage broker: 8.36%
Government lending institution: 6.81%
None of the above: 20.74%
Q. In applying for a home mortgage, did you know your credit scores before you applied?
I did not know my scores: 22.91%
I knew all my scores: 28.48%
I knew two of my scores: 7.74%
I knew one of my scores: 14.24%
I never applied for a mortgage: 26.63%
The survey of 300 respondents was fielded in late February. The survey data were collected from Survey Sampling International, using an opt-in panel of 300 respondents.