And how it varies across housing markets
Homebuyers should expect their credit score to fall for several months following their purchase.
New research by LendingTree has analyzed how taking out a mortgage affected the credit scores of more than 5,000 consumers and how quickly they recovered.
"A house is the biggest purchase most people make in their lifetime, with the accompanying mortgage being their largest financial transaction," said Tendayi Kapfidze, Chief Economist at LendingTree. "Most people know they should work toward having the best possible credit score before applying for a mortgage, as an applicant's credit score can significantly affect the amount and cost of borrowing. But what happens to your credit score after you get a mortgage?"
The average credit score fell 15 points after the mortgage was taken out and took 160 days to reach their low points due to the way lenders report to the credit bureaus – typically following the first payment.
Credit scores are then typically affected for another 161 days before returning to their previous levels as homeowners are shown to be making mortgage payments regularly.
The cities where scores recover fastest
The time taken for credit scores to recover – and the level of decline – is not uniform across all cities.
These metrics range from a 13-point decline from a score of 693, with recovery after a total 266 days in Richmond, VA; with those in Milwaukee seeing a 384 decline-and-recover cycle but a smaller drop in score (11 points from an initial 700).
Cities with the fastest credit score recovery |
||||||
Rank |
Metro |
Average |
Average |
Average |
Average |
Total |
1 |
Richmond, Va. |
693 |
-13 |
136 |
130 |
266 |
2 |
Minneapolis |
701 |
-11 |
136 |
131 |
267 |
3 |
Salt Lake City |
704 |
-15 |
139 |
132 |
272 |
4 |
Providence, R.I. |
691 |
-12 |
139 |
136 |
275 |
5 |
New Orleans |
686 |
-13 |
133 |
147 |
280 |
6 |
Houston |
688 |
-15 |
147 |
136 |
284 |
7 |
Cleveland |
699 |
-13 |
145 |
140 |
285 |
8 |
Columbus, Ohio |
697 |
-12 |
142 |
149 |
291 |
9 |
Cincinnati |
694 |
-19 |
154 |
141 |
294 |
10 |
St. Louis |
711 |
-15 |
143 |
151 |
295 |
11 |
Philadelphia |
701 |
-17 |
161 |
136 |
297 |
12 |
Detroit |
695 |
-14 |
144 |
153 |
297 |
13 |
Miami |
711 |
-16 |
145 |
154 |
300 |
14 |
Tampa, Fla. |
692 |
-13 |
159 |
145 |
304 |
15 |
Oklahoma City |
678 |
-19 |
148 |
156 |
304 |
16 |
Birmingham, Ala. |
671 |
-15 |
145 |
160 |
305 |
17 |
Buffalo, N.Y. |
705 |
-15 |
165 |
146 |
311 |
18 |
Boston |
714 |
-15 |
157 |
155 |
312 |
19 |
Portland, Ore. |
704 |
-14 |
158 |
156 |
314 |
20 |
Hartford, Conn. |
695 |
-14 |
166 |
148 |
314 |
21 |
Orlando, Fla. |
694 |
-13 |
153 |
161 |
314 |
22 |
New York |
710 |
-17 |
156 |
159 |
315 |
23 |
Las Vegas |
682 |
-15 |
165 |
153 |
317 |
24 |
Denver |
708 |
-17 |
168 |
150 |
318 |
25 |
Memphis, Tenn. |
675 |
-13 |
187 |
132 |
319 |
26 |
San Jose, Calif. |
725 |
-14 |
149 |
173 |
322 |
27 |
Indianapolis |
690 |
-14 |
158 |
164 |
323 |
28 |
Atlanta |
684 |
-16 |
158 |
165 |
323 |
29 |
Charlotte, N.C. |
703 |
-14 |
160 |
165 |
325 |
30 |
San Antonio |
668 |
-15 |
166 |
161 |
327 |
31 |
Kansas City, Mo. |
698 |
-13 |
169 |
159 |
328 |
32 |
Washington |
701 |
-14 |
159 |
171 |
330 |
33 |
Louisville, Ky. |
691 |
-14 |
157 |
175 |
332 |
34 |
Jacksonville, Fla. |
692 |
-15 |
162 |
170 |
332 |
35 |
Chicago |
695 |
-18 |
163 |
171 |
335 |
36 |
Baltimore |
695 |
-15 |
170 |
167 |
337 |
37 |
Pittsburgh |
695 |
-17 |
169 |
169 |
338 |
38 |
Nashville, Tenn. |
697 |
-15 |
165 |
181 |
346 |
39 |
Los Angeles |
713 |
-15 |
172 |
175 |
347 |
40 |
San Diego |
710 |
-14 |
175 |
173 |
348 |
41 |
Phoenix |
686 |
-16 |
175 |
175 |
350 |
42 |
Seattle |
708 |
-15 |
174 |
178 |
351 |
43 |
Dallas |
690 |
-13 |
173 |
183 |
356 |
44 |
Sacramento, Calif. |
701 |
-16 |
164 |
193 |
357 |
45 |
Virginia Beach, Va. |
683 |
-20 |
183 |
175 |
358 |
46 |
Raleigh, N.C. |
697 |
-16 |
180 |
184 |
363 |
47 |
San Francisco |
724 |
-13 |
179 |
196 |
375 |
48 |
Riverside, Calif. |
685 |
-17 |
180 |
195 |
375 |
49 |
Austin, Texas |
687 |
-15 |
179 |
197 |
377 |
50 |
Milwaukee |
700 |
-11 |
191 |
193 |
384 |