You did it! You took out a mortgage to purchase a home.

Your credit score undeniably plays an essential role in obtaining the best mortgage rates available. But do you know how a mortgage affects your credit score?

According to, your credit score does take a hit in qualifying for a mortgage. You will likely notice your credit score drop several points shortly after the loan closes.

Not to worry; this is only temporary. There are a few things you can do to build it back up:

  • By making payments on time, every time, your score will gradually improve. Your payment history accounts for 35% of your credit score, reveals FICO, so being consistent goes a long way. Besides, a mortgage is considered as responsible debt.
  • Plan to avoid any additional loans at least 6 months after your home loan closes to avoid high financing terms. Wait until your score has a chance to grow.
  • Eliminate other debts to show credit companies that you are a responsible borrower. This also helps your debt-to-income ratio stay within an acceptable range, boosting your credit score even more.

You will see a short-term drop in your credit score after closing on your mortgage, but overall a home loan can be beneficial to your credit if you follow these tips.