Hello, I am currently in the home buying process, have been pre-approved with a submitted and accepted offer. I want to know how this type of loan could potentially impact my credit since it will increase my debt by $250,000 (amount of loan). My current credit score is at 757. The only debt I have is $20,000 in student loans, with the occasional roll over of debt on my credit cards if I make a larger than usual purchase, which is not often and not my current situation. The two negative impacts that are keeping my score at a standstill right now are my credit age, which is at 4 years and 11 months (should see a slight improvement once my average reaches 5 years) and the # of total open accounts. I have 9 accounts (6 open and 3 closed) and according to credit karma 11 accounts would get me to increase my score. I know that people purchase homes that cost more than what their annually salary is all of the time. I just want to understand how a mortgage loan for a first time home buyer will impact my credit score. Especially if I need to take out a loan in the future for a new car, or if I decide to do home renovations and charge a large purchase on my credit card, etc. Just looking for general answers to be more educated. Any feedback is appreciated! Thank you!
Any new debt will be a negative relative to credit scoring. But as you pay, it eventually becomes positive. As you said, age of accounts is important. Having the right MIX of credit also impacts your score. A mortgage, a simple interest loan (e.g., car loan) and a few credit cards is a good start. Pay your bills on time and, eventually, very little will impact your score (referring to inquiries or new accounts), other than negatives (e.g, delinquencies, etc.).
