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Does your Mortgage Affect your Credit Score?

Duyen Nguyen  8-MINUTE READ  November 15, 2022


Your mortgage is likely one of the largest loans you have, but how does a mortgage affect a credit score?

The answer isn’t a one-size-fits-all approach because it depends on how you handle your mortgage. If you handle it right, a mortgage can greatly improve your credit score, but if you don’t, it can hurt your credit score considerably.

Knowing what happens to your credit score after buying a house is important, so you make the right decisions.

What is a Mortgage Payment?

A mortgage is a monthly payment you owe when buying a house. To qualify for the mortgage, you likely need good credit, but your credit score after buying a house greatly depends on how you handle your mortgage. For example, if you had great credit when you applied for the mortgage but then didn’t handle your mortgage properly, you could hurt your credit score.

Your mortgage payment comprises principal, interest, real estate taxes, homeowner’s insurance, and possibly mortgage insurance. It should take up no more than 28% - 31% of your monthly income and is due every month.

How a Mortgage Payment Helps your Credit Score

Here’s how a mortgage can affect your credit score. First, it helps all the important categories that make up your credit, including the following.

Payment History

If you make your mortgage payments on time, you can greatly increase your credit score after buying a house. Your payment history makes up 35% of your credit score, so if you make your mortgage payment on time every month, you’ll have a long timely payment history.

Provides Good Credit Mix

A part of your credit score is the credit mix, or how diversified your credit is. For example, if you have all revolving debt (credit cards), you don’t show lenders that you can handle an installment debt, like a car payment or mortgage.

When you borrow a mortgage, you mix up your credit, which helps the credit algorithm and gives you a better credit score.

Credit History Length

The longer you have your mortgage, the more it helps your credit score. Credit length makes up 15% of your credit score, so the longer you have the same mortgage, the more it helps your credit score increase.

How a Mortgage Payment can Hurt your Credit Score

Now that you know the good answers to the question ‘how does a mortgage affect your credit score it’s time to look at how a mortgage payment can hurt your score.

The good news is you are in control of most of these factors.

Hard Credit Inquiry

The first issue is the hard credit inquiry. When you apply for a loan or new credit, it hits your credit score with a credit inquiry. This means the creditor pulls your credit to see if you’re a good risk.

It’s necessary, and you can’t get around it, but you can control how shopping around for a mortgage affects your credit score.

When you shop around, do so within a short period – usually two to three weeks. Then, the credit bureaus will recognize that you’re shopping for the best rate and will only hit your credit report with one inquiry versus several. This will save your credit score.

Late Payments

Remember how we talked about the importance of payment history? The same is true if you miss a payment.

The credit bureaus don’t hit your credit score if you miss your payment by a few days; however, if you miss it by 30 days, it will considerably harm your credit score. Late payments continue hurting your credit score every 30 days that you miss, and if you go more than four months without making a payment, you could face foreclosure.


Foreclosure hurts your credit score the most. Not only will your payment history damage your credit score, but the foreclosure action will put a public record on your credit report and stay there for seven years.

Ways to Ensure your Mortgage Payment Helps your Credit Score

As you can see, a mortgage can help and hurt your credit score. The key is to keep up your responsibilities and use these tips to avoid your credit score after buying a house isn’t damaged.

Only Borrow what you can Afford

Make sure you can afford the payments you agree to when taking on a new mortgage. Think not only about your current budget but also about what you plan for the future. For example, will you go down to one income, change jobs, or have other situations?

Your mortgage is a long-term commitment, so make sure you can afford it long-term to prevent it from hurting your credit.

Talk to your Lender if you Can’t Afford your Payments

Talk to your lender if you’re having trouble affording your mortgage payments. They often have programs to help people in difficult situations, including loan modifications and forbearance programs.

While they might hurt your credit slightly, it’s a lot better than missing payments and/or losing your home in foreclosure.

Keep your Credit Diversified

It’s important to keep your credit diversified even with a mortgage. So carry a couple of revolving accounts and use them responsibly to ensure you’ll get the best results on your credit score.

Final Thoughts

The answer to does your mortgage affect your credit score is YES. It definitely does, but you can help how good (or bad) it affects it.

Borrowing what you can afford, making your payments on time, and keeping your mortgage long-term will affect your credit score best. If something happens and you can’t afford your mortgage payment, always talk to your lender.

There are ways to ensure your mortgage doesn’t hurt your credit, as long as you are proactive. Initially, everyone’s credit score drops a little, but the ‘newness’ of the account wears off quickly, and the payment history and credit history length benefit it more. 

-> Learn more:  What Credit Score do you Need for a Mortgage?

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