A solid credit score is necessary to get approved for a home loan. That's why we recommend against opening any new lines of credit or making large purchases on credit when applying for a home loan --these actions lower your score, resulting in getting denied a mortgage. 

But what about after? Does buying a house help or hurt your credit score? Let's find out. 

The short answer is that credit reporting agencies will penalize your mortgage debt in the short term. However, soon after, there's a nice boost to your score, given that your mortgage payments have been on-time. 

This eventual boost is why mortgage debt is considered "good debt." Here's why:

• Debt is typically categorized as "installment" or "revolving" credit. 
• The main difference is that installment credit is fixed --meaning there are a finite amount of monthly payments.
• Examples of installment credit are student loans, personal loans, and mortgage loans.
• Revolving credit, on the other hand, has a line of credit that's open.
• Payments fluctuate each month, and there could be new charges, so there isn't a definite pay-off date. 
• Examples of revolving are credit cards.

To summarize:

Installment credit, like a mortgage, eventually helps your credit history by making consistent payments that whittle down the balance. On the other hand, credit card debt can continue to climb, so it is more likely to impact your credit negatively.

How Long Will It Take For Your Score To Go Up After Buying A Home?

While there is no definite answer as to when you'll see an improvement, on average, you'll see it recover in about 5 months. Also, that change may be in incremental jumps rather than one change.

However, remember that your other activities are also affecting your credit score. On average, the following activities will continue to affect your credit history for:

• Bankruptcy - 6+ years
• Home foreclosure - 3 years
• Missed/defaulted payments - 18 months
• Late mortgage payment- 9 months
• Closing a credit card account - 3 months
• Maxing out a credit card account - 3 months
• Applying for a new credit card - 3 months

How To Improve Your Credit Score After a Mortgage

Use these tips to help you continue to build your credit score after a mortgage. These are based on FICO's recommendations --the most commonly used credit score model.

• Payment history - Never miss a payment.
• Credit utilization - Keep your revolving credit under 30%. 
• Length of credit history -  Keep older accounts open, even if you don't use them regularly.
• Credit mix - Have various revolving and installment credit to show that you can manage different types of credit responsibly.

Obtaining a mortgage might make your credit dip slightly at first, but it will eventually increase – and maybe even higher than you had before!  Start your pre-qualification online today and reap the many benefits that a home loan can afford you.