How Does a Mortgage Affect Your Credit?So many people these days are trying to take advantage of the great home prices out there. It's definitely a buyers' market, even with tighter credit the interest rates out there are still worth taking advantage of. The local Maryland movers just remind you that you'll be more scrutinized, with lenders looking at income, debt, credit history and other items to see if you 'are worth taking the risk'. A mortgage can be a sign of financial responsibility that can help your credit score because this makes you a creditworthy consumer. The local Maryland movers found out that most credit reports single out mortgages in their own category, separate from everything else. Lenders in the end want to know if you're living up to your obligation, making your payments on time.
The All My Sons of Maryland learned that a mortgage can round up your credit history. So over time having a mortgage on your credit improves your credit mix, so you don't just have credit cards on your report. You probably won't get more than a few points more, but it's still affects your credit positively. If you've paid off your mortgage, know that it will be considered but it won't count or affect your credit as much as a mortgage that's still being paid month after month. The local Maryland moving specialists found out that the reason for that is that the scoring model doesn't differ between homeowners who have paid off their mortgage and the ones that have refinanced it.
For the cons of having a mortgage, all you have to do is look to those who are missing their payments. Or those who have had to go into foreclosure because their properties are underwater or their part of the unemployment rate statistic. If you miss a mortgage payment, your credit score can drop in a significant way, possibly drastically. For most credit card models, missing a payment has less impact than missing a mortgage payment or a car payment. This is due to the scoring model considering a late payment on a higher, secured debt as a higher risk. A credit card, the All My Sons of Maryland, learned is considered an unsecured debt. So the bigger the asset the bigger the credit score impact.
If you're making your payments on time, your credit score can still be affected by a mortgage. Just the addition of these regular payments will usually drop your credit score in the beginning. Research has shown that someone who's opened an account recently is more likely to have problems paying on time in the future than someone who hasn't. But, the credit score typically will bounce back within six months if the person keeps paying their debt on time.