Does a new mortgage lower your score?

Question

I just bought my first house in may of this year.  When I closed my loan my scores were around 700.  The mortgage just appeared on my credit report last month and my scores today were in the 660's - 680's.   I figured my scores would have been going up since I have paying everything on time.

Also, do high balances on student loans lower my score?  I'm making all my payments on time, but maybe I need to pay down some more of that debt to higher my score?

Thanks guys.

Carlos Flores · Answer

Three items top the list in this scenario: 1) inquiries to get new loan; 2) age of the new loan; 3) increased utilization.  Should go up some after aging at least 6 months.

Ask for a credit line increase on your credit cards that report your available credit.  Some credit cards only report your balance.  You don't want these cards.  They increase your utilization, lowering your score.  Anyway, a CC CLI should increase your score a little as well (as long as you don't increase your cc debt too).

Sherry Lewis · Answer

Asher,

I am not sure what other items you have on your credit, but if you have credit card debt, try to make sure the balances on your cards are (preferably 33%) no more then 50% of your available credit.  They want to know that you have the ability to use your cards without over using your cards.  Next with the new mortgage, that changes your debt to income scenario.  That could be what happened to your score.  If that is the case, pay down any revolving debt you may have to adjust it accordingly.  After the mortgage is on your credit for awhile, you will see your score rise assuming no late payments and getting any cc's in line with the above ratio.  It can actually grow to a higher number.  The strongest piece of advise I can give you when it comes to your score is NEVER let your mortgage go 30 days late.  Being late on a mortgage payment is the single worst case you can have as they will seriously hit your score hard (usually 40-50 points min.) and it takes about a year of NO late payments of any kind to recover from it.  Creditors figure if you cannot pay your "rent" on time you are a huge risk.  I hope this helped some!

Sherry

Mitch Kronowit · Answer

I believe any time you open up a new line of credit (credit card, car loan, mortgage, etc.), your score takes a small hit because you've just created another mouth (debt) to feed. Of course, as time goes on and you continue doing a good job of feeding that mouth, your score will return to its former level if not go even higher.

Asher Anthes · Answer

Thanks for the advice!  Hopefully this will help.

Does a new mortgage lower your score?

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