How Long Does a Mortgage Affect Your Score?

How Will Opening a New Mortgage Account Affect Me?

Your credit scores may initially decrease when you get a new mortgage for several reasons.

• A new account has been added to your credit report. This reduces the average age of your accounts, which can negatively affect your credit score.
• You don't yet have a payment history for the loan. Credit scoring models use your payment history to evaluate your risk as a borrower.
• A hard inquiry resulted from your credit check. Applying for a loan triggers a hard inquiry, which can cause a temporary dip in your credit score. The impact is usually minor; in many cases, a hard inquiry lowers your FICO^® Score^Θ by fewer than five points.

Learn more: Does a Mortgage Hurt Your Credit Score?

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How Long Does a Mortgage Affect Your Credit Score?

A mortgage affects your credit score as long as it is on your credit report. A mortgage remains on your credit report as long as the loan is open. Once your mortgage is paid off, the account typically stays on your credit report for up to 10 years if it was closed in good standing.

After the initial dip in your credit scores from getting the loan, your mortgage can either help or hurt your credit score depending on how well you manage the debt. Your mortgage can positively affect your credit score in several ways.

• Positive payment history: Your payment history is the single most important factor in your credit score. Making every mortgage payment on time and in full will help your score rebound from the impact of the new loan and have a positive effect over your mortgage term.
• Improved credit mix: If you had no installment loans before getting a mortgage, adding one can benefit your credit mix. Demonstrating that you can manage different types of credit, including installment loans like a mortgage and revolving credit card accounts, can help increase your credit score.
• Length of credit history: Although a new mortgage initially lowers the average age of your credit accounts, keeping the loan open for many years can eventually increase the length of your credit history, which can boost your scores.

On the downside, a mortgage can also hurt your credit score if you don't make your payments. Many mortgage lenders give you a grace period of about 15 days after your payment due date to pay your mortgage without affecting your credit or incurring fees. (You can find your loan's exact grace period on your mortgage statement or loan documents.)

Once your payment is 30 days or more past due, your lender will report it to the three major credit bureaus (Experian, TransUnion and Equifax). A missed mortgage payment stays on your credit report for seven years and has a serious negative impact on your credit scores. Once you miss three payments and are 90 days past due, your loan may be considered in default. Depending on your loan terms and state laws, your lender may begin the foreclosure process.

Tip: If you've missed a mortgage payment (or think you might be in danger of doing so), contact your lender immediately to discuss your options. Getting your payments back on track as soon as possible can help prevent further damage to your credit.

How to Protect Your Credit After Taking Out a Mortgage

Exactly how a new mortgage affects your credit score can vary depending on your credit profile and your score before getting the loan. To see the impact, wait until the mortgage appears on your credit report (typically 30 to 60 days after closing) and then check your credit score.

If you're concerned about a drop in your credit score after getting a mortgage, the following habits can help your credit bounce back.

• Make mortgage payments on time. Setting up automatic payments through your bank or mortgage lender helps ensure you don't miss a payment. Just make sure you have enough money in your checking account to avoid overdrafts or rejected payments.
• Keep credit utilization low. Your credit utilization rate, the percentage of revolving credit you're using relative to your credit limits, is a major factor in your credit score. To find yours, divide your total credit card balances by your total credit limits. For example, if your total balance is $5,000 and your total credit limit is $10,000, your utilization is 50%. Lower credit utilization is better; people with the best credit scores tend to have utilization rates below 10%.
• Limit new credit accounts. You may be tempted to apply for new credit cards or a personal loan to furnish or improve your new home. However, each application generally triggers a hard inquiry, which can ding your credit score. If possible, avoid opening new credit accounts for several months after getting a mortgage.
• Keep old credit cards open. Closing an unused credit card, especially an older one, could reduce your available credit and shorten your credit history. Keeping older cards open and using them occasionally can help your credit score. If the card has an annual fee, see if you can switch to a fee-free card without closing the account.
• Add household payments to your credit report. Experian Boost^®ø is a free feature that adds your eligible payments for utilities, phone, insurance and streaming services to your Experian credit report. These payments normally aren't reported to credit bureaus. By adding them to your Experian credit file with Experian Boost, you can get credit for timely payments, which could improve your credit scores.

Learn more: How to Improve Your Credit Score Fast

Frequently Asked Questions

The Bottom Line

Getting a mortgage may negatively affect your credit, but the impact is typically slight. However, when you're preparing to apply for a mortgage, even small changes to your credit score could mean higher interest rates. To protect your credit score, consider signing up for free credit monitoring from Experian. You'll get access to your Experian credit report and FICO^® Score, insights to help improve your score and real-time alerts of important changes to your credit that could stall your loan approval.