How Applying For A Mortgage Will Affect Your Credit Score

How Applying For A Mortgage Will Affect Your Credit Score

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Your credit score plays an important role in securing your mortgage. That’s because lenders use it (alongside your credit report and other criteria) to determine how likely you are to repay your home loan on-time and in-full. But much like applying to any other form of credit, applying for a mortgage can impact your credit score in a number of ways.

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Applying for a mortgage

Paying your mortgage

Chase Bank

  • Annual Percentage Rate (APR)

    Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

  • Types of loans

    Conventional loans, FHA loans, VA loans, DreaMaker℠ loans and Jumbo loans

  • Terms

  • Credit needed

  • Minimum down payment

    3% if moving forward with a DreaMaker℠ loan

SoFi

  • Annual Percentage Rate (APR)

    Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

  • Types of loans

    Conventional loans, jumbo loans, HELOCs

  • Terms

  • Credit needed

  • Minimum down payment

One other way a mortgage can have a positive impact on your credit score is by contributing to your credit mix. Credit mix makes up 10% of your credit score, according to Experian. While it isn’t the most influential factor in determining your credit score, it can still show lenders that you’re good at managing different kinds of credit, like a mortgage, credit cards and a car loan. That’s not to say that you should apply for a mortgage just to improve your credit mix — you should only take on a mortgage if it’s genuinely the best next step for your financial goals.

Consider using a credit monitoring service like CreditWise® from Capital One or Experian to help monitor your credit to ensure that there are no fraudulent or inaccurate marks on your report, which could be bringing down your credit score.

Bottom line

Similar to applying for and managing any other form of credit, apply for and managing a mortgage can impact your credit score in different ways. That’s not to say that you should be afraid of the ways a mortgage could impact your credit score. Even if your credit score takes an initial hit after applying for a mortgage, continuing to practice healthy habits when it comes to managing your debt can help you improve your score again over time.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.


https://www.cnbc.com/select/how-applying-for-a-mortgage-affect-credit-score/

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