How Taking Out a Mortgage Will Affect Your Credit Score

Maintaining a good credit score is essential for anyone trying to get through their responsibilities in life. Your credit determines everything from the loans and rates you get to the quality of your cellular plan and utilities. Naturally, anyone taking out a house mortgage may wonder how this affects their credit score.

Immediate Effects of a Mortgage on Your Credit

When you take out a mortgage, your credit agency recognizes this as a large and sudden debt. Because of its sheer proportion, you will inevitably get penalized with a short-term decrease in your credit score. If you have a decent credit score, this should be no cause for concern as it’s a natural part of the process. 

This slight smudge on your credit report will actually improve, which we’ll cover more in its long-term effects.

How Mortgage Affects Your Credit Score Long-Term

In the long run, your mortgage payments will be seen as good debt. The concept of good debt means being able to pay off things that eventually increase your assets. A mortgage fits into that as you can consistently pay off your fees with a finite end goal that results in a property in your name.

Your credit score will see continuous improvement beyond the initial dip as you continue to pay off your mortgage. Local mortgage lenders usually provide different plans depending on an individual’s credit history so that they can maintain a good score. When you get good interest rates that you can feasibly reach throughout your payment plan, your credit score will naturally move upward.

Expect the initial dip to show up in your credit reports within a couple of months of taking out your loan. Then, within another five to six months, your credit score will start rising again as long as you continue to pay your debts efficiently.

How Mortgage Trickles Over to Other Credit Lines

It’s important to keep in mind your other existing debts and lines of credit. The minute you take out that mortgage, your decreased credit score may result in an increase in interest rates for other loans. Remember that your credit report will only show this as good debt that proves you’re responsible after months of paying it off.

Once you’ve reached that latter where your mortgage improves your score, that’s when you can be eligible for more loans with better rates and approval.

Raising Your Credit

Even though we’ve covered how a dent in your credit score is normal for around half a year after you’ve taken out a house mortgage, you may still want to know how to increase your score. 

After all, there are instances where you simply need to take out a different loan within the same span of time. In this case, you can employ some healthy credit habits to help speed things along. Make sure you decrease your credit utilization, ensure that any credit cards don’t close, balance out your payments between cards, and pay your other debts on time.


It’s good to learn these facts before taking out a mortgage so that you can know what to expect. It should also give you an idea of whether or not it’s the best time for you to purchase a home. In the end, a home or any property is a major investment that’s worth it if you can financially sustain it.

Hawkins Home Loans provides refinancing, home equity cashouts, and home loans from Sacramento, CA. Reach out to us now for a stress-free process with low rates and great service.