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From the Experts at Credit.com

How Selling Your Home Can Impact Your Credit

by Lucy Lazarony

How Selling Your Home Can Impact Your Credit

Are you getting ready to sell your home, but wonder if it will affect your credit? Selling your home could impact your credit in a few key ways. Let’s take a look…

Impact On Your Payment History

Having a mortgage with a positive payment history is a big plus for your credit. When you sell a home and pay off a mortgage in full, the paid mortgage will stay on your credit report for 10 years from the paid date.

However, that means any negative information from your mortgage payment history will stick around, as well. Negative information, such as a missed mortgage payment, remains on your credit report for seven years.

So even after you sell a house, the impact of how you paid your mortgage can impact your credit for years to come.

Impact On Your Current Debt Obligations

If you sell your home and obtain a mortgage for a new home, you have the opportunity to continue benefiting from keeping a good payment history on a current mortgage. Over time, this can raise your scores.

However, if you sell your home and choose to rent and therefore do not carry a mortgage anymore, it won’t hurt your credit, but it also will not raise your score.

You might also decide to pay down existing credit card debt if you’re able to allocate some of the funds from the sale of your home.  Paying down revolving debt can raise your credit scores, especially if you are using a high percentage of your available credit (your debt utilization is another important factor in your credit score).

Short Sales and Your Credit

One way that selling your home can negatively affect your credit is by opting for a short sale. A short sale means you sell your home for less than you owe on the mortgage.

Selling your home in a short sale will cause your credit to drop significantly. It’s important to consider your options carefully before you decide, and be prepared to work over the next several years to re-establish better credit if a short sale is your best option.

Staying current with your other payments and paying down credit card debt are good strategies for lifting up your credit score over time.

Track your progress through Credit.com, where you can get two free credit scores, updated every month.


  • Gigi

    my sister told me that if I sell my house with my history of on time payments to rent I may not be able to buy again since I’m the hook for my kids’ huge student loan debt – is this true? I plan to pay down my credit card debt. Thanks!

    • http://www.credit.com/ Credit.com Credit Experts

      It might be. When you apply for a mortgage, the lender will look at your credit scores, your income and your debt obligations. We’re guessing you didn’t have the student loan debt when you qualified for the mortgage you have now. We addressed the issue of student loans and mortgages here: How Student Loans Can Hurt Your Mortgage Application


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  • Meet The Expert

    lucy_lazarony GravatarLucy Lazarony is a freelance personal finance writer. Her articles have been featured on Bankrate, MoneyRates, MSN Money, and The National Endowment for Financial Education. Prior to freelancing, she worked as a staff writer for Bankrate for seven years. She earned a bachelor's degree in journalism from the University of Florida and spent a summer as an international intern at Richmond, The American International University in London. She lives in South Florida.
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