How buying a home impacts credit scores

And how it varies across housing markets

How buying a home impacts credit scores

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
Initial
Score

Average
Decline
in Score

Average
Days in
Decline

Average
Days to
Recover

Total
Days

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