If you’re about to apply for a mortgage loan, you are most likely concerned about how the loan will affect your credit score. This is because your credit score significantly influences your financial prospects and your chances of qualifying for loans, lower interest rates, cash back rewards, and travel points. It can also contribute to the mortgage approval process and the strictness of your payment terms.

So, how many points does a mortgage raise your credit score? The short answer is that on-time payments and proper management of your overall credit utilization will determine how much your score will increase. 

In this article, we’ll explain how taking a mortgage impacts your score and how to quickly repair the effects.

What Is a Credit Score?

A credit score is a figure between 300 and 850 that depicts your creditworthiness and is determined by your credit history and financial habits. Many lenders and financial institutions use the score to decide whether you’re fit to borrow credit—the higher your credit score, the higher your chances of being approved for the loan. 

Here’s a breakdown of the scores according to the most popular scoring model, FICO^®:

• Excellent: 800–850
• Very Good: 740–799
• Good: 670–739
• Fair: 580–669
• Poor: Below 580

There are multiple credit-scoring models that lenders use to establish your credit score, but the most widely used one is the FICO Score 8. This model uses five main components to decide your score, including:

1. Payment history
2. The amount owed
3. Length of credit history 
4. New credit inquiries
5. Your credit mix

Building and maintaining a strong credit score is essential for securing a favorable mortgage. 

Key Components That Make Up Your Credit Score

The following table illustrates how the main components (used in the FICO Score 8 model) may affect your credit score: 

Components	Description	Percentage of Score
Payment history	This is the most influential factor. It indicates how consistently you pay your bills on all credit accounts, including credit cards, loans, and mortgages. Late payments damage your score	35%
The amount owed	The amount you owe significantly affects your credit score. It covers your debt levels and your credit utilization ratio. To positively impact your score, aim for low utilization	30%
Length of credit history	This factor considers the average age of your credit accounts. A longer credit history indicates more stable borrowing habits and contributes positively to your score	15%
New credit inquiries	This component constitutes 10% of your score. Multiple hard inquiries on your score in a short period can significantly ding your score	10%
Your credit mix	This factor comprises different types of credit, including revolving credit, installment loans, mortgages, and more. A diverse credit mix indicates that you can handle various types of credit obligations	10%

Changes to your financial situation may also impact your credit score. For instance, applying for new loans or multiple credit cards can cause your score to dip, while correcting errors on your credit report can boost it. Understanding when to apply for a mortgage can help you minimize the negative effects on your credit score. 

Does Having a Mortgage Increase Your Credit Score?

Yes, having a mortgage can increase your credit score over time, but there will be some initial damages. 

A mortgage is one of the largest types of debt you can take on. Due to its size and long-term nature, the credit system treats it differently from other types of loans. As a result, it may have both temporary and long-term effects on your credit score. 

Temporary Effects of Applying for a Mortgage

When you apply for a mortgage, lenders conduct a hard inquiry on your credit report to determine your creditworthiness. 

A single hard inquiry on your account temporarily lowers your score by 5–10 points, so it may not cause much damage. The inquiry will also naturally drop off your report after two years, which may cause the deducted points to be restored. 

Alternatively, if you make multiple mortgage applications within a short time, you’ll receive several hard inquiries on your report, which could severely drop your score.

If the multiple hard inquiries on your report show up because you’re mortgage-rate-shopping, you can evade the major credit score dip. Conduct your research within 30 days or less, and credit-scoring models like FICO will treat all the hard inquiries as a single inquiry, minimizing the negative impact on your score. 

Long-Terms Effects of a Mortgage on Your Credit Score

Over time, having a mortgage positively affects your score. Here’s the difference it could make to your credit:

• Establishes payment history—Making timely mortgage payments helps to establish a positive payment history, which accounts for 35% of your credit score. Just as on-time payments are crucial for improving your credit score, defaulting can cause your score to drop as well 
• Diversifies your credit mix—Adding a mortgage to your credit mix creates a diverse credit portfolio that benefits your credit profile. If you manage the various types of credit in your portfolio well, you can significantly increase your credit score
• Lengthens your credit history—Mortgages typically span 15 to 30 years, so making regular, on-time payments helps you build a longer credit history. If you have limited credit experience, a mortgage loan can be good for boosting your score
• Builds valuable equity—Paying your mortgage builds equity, which is useful in the grand scheme of your financial journey. You can leverage equity for future loan applications and qualify for better interest rates and terms

How Many Points Does a Mortgage Improve Your Credit Score?

On average, you should see a 20–100 point increase over time after you’ve taken a mortgage—if you keep up responsible credit-management habits. Your specific score increase will be based on the ability to maintain on-time payments and the amount of credit you use compared to the debt you owe. 

If you started your mortgage with a lower score, you’ll notice a significant increase over time as long as you’re effectively managing your debt. 

A good credit mix, which includes revolving credit, auto loans, and installment loans, may also help. Having a diversified portfolio in addition to the mortgage may trigger an additional increase in your credit score.

Factors That May Affect Your Credit Score Raise

The credit score increase that may occur after you get a mortgage varies, depending on your specific circumstances and several factors, including: 

• Starting score—The score you used to apply for a mortgage can impact your score increase. Having excellent credit will cause the temporary dip in your credit score to be less pronounced, but a lower starting score will cause a more noticeable decrease
• Payment history—This is the biggest factor in determining how your score will go up over time. Only consistent on-time mortgage payments can significantly help you build and maintain a strong score
• Credit utilization ratio—Although your mortgage significantly increases your total debt, it also raises your available credit. Keeping your debt-to-credit ratio low (below 30%) can aid your score increase
• Credit profile modifications—Opening new credit accounts or taking more loans while repaying your mortgage can significantly impact your score. Missing payments on other lines of credit or triggering hard inquiries on your credit report will also influence your credit score

Focusing on responsible credit management can help you maximize your mortgage to boost your credit score as time passes.

Does the Length of Your Mortgage Affect Your Score?

Yes, the length of your mortgage can significantly affect your credit score. Taking a long-term mortgage, such as a 30-year mortgage, will continue to build your credit history for a longer time, improving your score. There are other ways it could affect your score, including:

• Reducing your principal balance—Your principal balance is the original amount borrowed or owed on a loan. Reducing the balance by making regular payments positively impacts your credit utilization ratio, which affects 30% of your score. It’s an indication that you know how to manage and commit to your financial obligations
• Strengthening your credit profile—A long-term mortgage serves as a buffer against other future financial activities. If you decide to take another loan in the future, a responsibly managed mortgage will demonstrate your ability to handle a diverse credit mix 

Making extra payments toward your principal balance can help you significantly reduce the total interest you have to pay over the life of the loan and help you pay off the mortgage faster. 

Benefits and Drawbacks of Taking a Mortgage on Your Credit Score

If you’re considering taking a mortgage but are worried about its effects on your credit score, weigh the pros and cons before you decide. The table below shows the distinct benefits and drawbacks of taking a mortgage:

Benefits of Taking a Mortgage	Drawbacks of Taking a Mortgage
Contributes to a positive credit history as long as payments are consistent and timely	Late payments severely impact your score with long-term consequences
Adds a significant installment loan to your credit profile, making you attractive to lenders	Significantly increases your debt-to-income ratio, limiting your ability to qualify for other loans
Builds a stronger credit score that qualifies you for lower interest rates	Temporarily lowers your score at the beginning of the application
Enhances your borrowing power for major future financial needs	May restrict your ability to take on other debt

In summary, enjoying the benefits of a mortgage on your credit score is directly hinged on your ability to make on-time payments and manage debt responsibly.

Instances When a Mortgage May Dip Your Score

When your mortgage gets approved, your credit score takes a 15–45-point dip, depending on how strong your credit is. You’ll see this dip within a few months after your first payment, but your score may start to increase after five months if you maintain healthy credit habits.

Other instances when your mortgage may cause your score to dip include:

• Failing to manage your payments—Mismanaging your debt is one of the fastest ways to severely damage your credit. If you miss payments or carry high balances on your revolving credit right after a mortgage, your credit score takes a hit. You must always keep your utilization rate low to achieve a healthy score
• Accruing and juggling a large amount of debt—Taking on massive debt will substantially increase the debt portion of your debt-to-income ratio, raising a red flag to lenders. It will negatively impact your credit score, disqualifying you from future loans. It may also lead to financial distress, which will make it difficult to maintain your mortgage repayments, leading to score damage

How To Boost Your Score Quickly After Taking a Mortgage 

Getting your credit back up after the initial hit is crucial if you hope to take future loans or make another big purchase soon. 

A healthy credit score tells lenders you’ve maintained a commendable financial history and can be trusted with more financial responsibility. This can help your chances of getting approved. 

Use the tips below to boost your score and keep it healthy:

1. Make timely mortgage payments—Begin by fixing a budget to ensure you fit your mortgage payments into your financial plan. Set up automatic payments or reminders to ensure you make timely payments when due. Every time you pay on time, you strengthen your score and demonstrate that you’re a responsible borrower 
2. Avoid applying for new credit or closing a credit card—Requesting a new credit card triggers a hard inquiry that dings your credit score. Wait until your score recovers before applying for another credit. Elongate your credit history by keeping older credit accounts open, even if you no longer use them. The length of your credit history also affects your score
3. Work with a credit building solution for accountability—Using a credit building solution like CreditStrong can help boost your score significantly if you maintain positive credit habits. Its credit building accounts allow you to establish a positive credit history and report your payments to all three major credit bureaus, helping you demonstrate responsible credit use 

Build Better and Faster Credit With CreditStrong

CreditStrong by Austin Capital Bank is a reliable and transparent credit building platform that combines different kinds of credit with a savings account, helping you strengthen your credit score and grow your savings. 

CreditStrong reports directly to the top three credit bureaus—Experian, TransUnion, and Equifax—to ensure absolute transparency. This partnership allows you to obtain a free FICO Score monthly to keep track of your progress. 

CreditStrong offers three main types of accounts: Installment (Instal), Revolving (Revolv), and MAGNUM. Each of these accounts focuses on helping you build your credit score responsibly.

How CreditStrong Accounts Work

CreditStrong accounts are designed to build credit from scratch or past damage by combining a secured installment loan or a revolving line of credit with a savings account. Making consistent on-time payments on any of the CreditStrong accounts you choose will help improve your credit score.

The table below gives you a clearer picture of what to expect:

CreditStrong Account Type	Description	Ideal For	Not Suitable For
Instal/CS Max	A secured installment loan for credit building. Builds up to $1,100 of installment credit and raises your score an average of 45 points	Beginners with limited credit	Users with short-term financial goals
MAGNUM	High-impact installment loan for significant credit score increases. Builds up to $30,000 installment credit and boosts score an average of 86 points	Consumers seeking significant score boosts or higher credit limits	Those with recent bankruptcy or people applying for a mortgage or business loan
Revolv	Secured revolving line of credit for improving credit utilization and building savings. Increases score an average of 62 points	People with high credit card balances looking to lower credit utilization	People who need immediate access to funds

Note that CreditStrong is not a credit repair service, so it cannot remove negative credit history from your credit profile.

Get Started With CreditStrong

CreditStrong offers a better credit building channel than a secured credit card. You don’t need a large deposit to open an account, and there’s no minimum score to get started. Follow these steps to create your account:

1. Click here to get started and discover account options
2. Select an account based on your credit goal:
   • MAGNUM—Starting at $30 a month
   • Revolv—$99 a year
   • Instal—Starting at $28 a month
3. Submit an online application for a CreditStrong account
4. Track your progress, savings, and payments in your dashboard

CreditStrong helps improve your credit and can positively impact the factors that determine 90% of your FICO score.

Start Building credit today