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Can Selling Your Home Hurt Your Credit?


Maintaining a good credit score isn’t always easy. Maxing out credit cards, making late payments and failing to pay off your student loan debt are just a few moves that can hurt your credit. Even selling your home could potentially have an impact on your credit. Before you get to the closing table, here’s everything you need to know about home sales and credit scores.

Having a Mortgage Can Help Your Credit Score 

Having a mortgage to pay off can actually be a good thing. As long as you’re making good financial decisions, you can use your home loan to boost your credit score.

Wondering why that’s the case? In the FICO credit scoring model, 35% of your credit score is based on your payment history. If you can make on-time mortgage payments every month over the course of 15 or 30 years, you can raise your score.

If you try to take out another loan, lenders and creditors will probably focus on your mortgage payment history. Keeping up with mortgage bills can show lenders and creditors that you’re fiscally responsible.

On the other hand, having a tendency to miss your mortgage payment deadlines could prevent you from qualifying for another loan or line of credit. A mortgage loan is a type of installment loan, meaning that it’s paid off over time according to a fixed payment schedule. While revolving credit accounts (like credit card accounts) can do more damage to credit scores than installment loans, your credit score could take a hit if you forget to make any sort of credit or loan payment.

How Selling Your Home Affects Your Credit History

Can Selling Your Home Hurt Your Credit?

Selling your house won’t automatically hurt or help your credit score. But the impact of ditching your home (and your mortgage) will depend on the state of your credit history before you hand off your home.

If you have a negative credit history, selling your home won’t solve your problems. Black marks and negative items (like foreclosure, late payments and bankruptcy) can remain on your credit report for up to seven years. So your past mistakes can continue to haunt you long after you part ways with your house. That could be an issue if you sold your old home with the intention of buying a new one.

Selling Your Home Can Affect Your Credit Mix

Ten percent of your FICO credit score depends on the types of credit accounts you have. If your mortgage is the only kind of installment loan you have, paying it off and selling your home could cause your credit score to dip slightly.

But keep in mind that even if you get rid of your mortgage, it’ll still appear on your credit report. It can continue to affect your credit history for up to 10 years after you pay it off.

When You Can Boost Your Credit By Selling Your Home

Can Selling Your Home Hurt Your Credit?

Once you sell your home and finish paying off your mortgage, you’ll no longer have to worry about sending your mortgage lender a check every month. Then you can take the money you once used to cover your mortgage bills and pay off some of your other debts.

For example, if you’re drowning in credit card debt, selling your house might leave you with enough money to finally eliminate it. In the process of paying down debt, you can improve your credit score significantly.

Bottom Line

While taking on a mortgage can give you the opportunity to raise your credit score, selling your house will probably have a minimal effect on your credit. If you decide to start renting again, you’ll have to find other ways to build credit since you’ll no longer be able to do that through a mortgage.

Ultimately, however, it all comes down to the way you handle your mortgage payments. If you have a negative payment history, it’ll continue to have a negative effect on your credit after you sell your house.

If you’re not sure how selling your house will affect your credit, it’s a good idea to take a look at your credit report and review your credit history. You can order a free report from each of the three credit reporting bureaus each year by visiting

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