When you’re trying to maintain a good credit score, it isn’t easy. Making late payments and maxing out credit cards are just a couple of ways you can hurt your credit. Selling your home could potentially impact your credit. If you are making good financial decisions, you can use your home to boost your credit score. With the FICO credit scoring model, 35 percent of your credit score is based on payment history. When making on-time payments every month, over the course of your mortgage, you can expect you credit score to rise.
However, if you tend to miss your mortgage payment or make a late payment, this could prevent you from qualifying for another line of credit. Mortgage loans are installment loans. This means they are paid on a fixed schedule. Credit cards are revolving credit. Missed or late payments on credit cards affect your credit more than mortgage payments.
How does selling my home affect my credit?
Selling your home will not automatically hurt or help your credit score. However, the impact is all dependent on the state of your credit history before you sell. If you have a negative credit score, selling will not help. Black marks can remain on your score for up to seven years. Past mistakes can continue to haunt you for long after you’ve sold. This can hurt you if you’ve sold with the intent of purchasing a new home.
With your FICO score, 10 percent depends on the type of credit accounts you have. If a mortgage is your only installment loan, you should expect your score to drop a bit. However, remember that if even you no longer have your mortgage it can stay on your credit history for up to 10 years after it is paid off. In conclusion, it comes down to how you handle your payments. If you have a negative payment history, you will continue to have negative marks after you’ve sold your home.