Most homeowners want to know if selling their homes can affect their credit score. Selling your home is supposed to be a good thing for your credit score because it helps to pay off your mortgage balance. In the same vein, selling your home could also affect your credit negatively.
This article will explain in detail the positive and negative impact of selling your home on your credit score.
How Selling Your Home Affects Your Credit Positively
If you sell your home and apply for another mortgage to get a new home, you’ll enjoy certain advantages of having a mortgage in your mix of credit accounts. If you keep up good behavior of payment, paying on time as at when due, your credit score will increase over time. But if you sell your house and choose not to apply for another mortgage, your credit score may reduce. The reason is, your account mix is worth 10% of your total credit score. Having a different mix of accounts like auto loans, credit cards, mortgage loans, etc will help to boost your credit score.
Also, when you make a profit from the sale of your home, you can use your earning to pay off any credit card or loan debt. You can increase your credit scores by paying this type of debt especially if you’re using a large amount of your available credit. That’s because your credit score is based on the amount of debt you’re carrying.
How Selling Your Home Can Affect Your Credit Score Negatively.
Selling your home as pre-foreclosure can affect your credit score because you’ll be selling your home for less than what you owe on your mortgage. Selling your home in a short sale can drop your credit score as low as 160 based on what your score was before you sold your house. If you’ve ever considered selling your as a pre-foreclosure, you should consider the effect it would have on your credit score. If your credit score drops, increasing your credit score back to its former position may take a lot of work to do.
Why Your Credit Matters
Your credit has a lot of relevance as long you continue to buy houses or sell houses. Your credit matters when you need to qualify for loans and credit cards. It matters when you want to get your homeowner’s insurance premium and your auto insurance premium. It also matters when you’re applying for a new job; it’s part of the determining factor for your employment. Most employers pay great attention to your credit score during the hiring process, and a low credit score can cost you the job. Hence, you must pay attention to your credit score, keep track of your credit score regularly and get credit reports when you need to.
Selling your home can affect your credit score both positively and negatively. But if you continue to make your mortgage payment in due time, selling your home and applying for a new mortgage for a new house will show the lenders that you’re a trustworthy person and worthy of getting a loan.
Selling your home can help improve your credit score if you’re able to sell it fast and apply for another mortgage to get a new house. To sell your house fast, you can sell to a reliable cash house buyer. At Chase Pays Cash For Houses, we buy houses Birmingham Alabama at the best prices. We make the best offer for your house and we close the sale of your house in record time.
Contact us today to learn more about our services!