how will a mortgage affect my credit?

[Anonymous]

I am buying an apartment this summer and am wondering how the mortage will affect my credit? I have read on NerdWallet that the multiple hard inquiries within 45 days will count as one - is that actually true? Can someone who's actually gone through this please verify?

Also I am interested to know how my score will be affected considering that with the mortgage I will be using over 50% of my available credit line. Or does the mortgage not count toward this ratio?

Just curious, basically, if I have any hope of getting any good credit cards after this.

If it matters, my current scores are 751 Experian, 761 TransUnion, and 775 Equifax.

Thank you.

[JVille]

In the long run a perfect payment history on a mortgage will increase your Fico Score.

[Anonymous]

Yeah, I realize that, but my question is more about the immediate effects, like the first 6-12 months.

Well, actually, I won't get to under 50% of my used credit for quite a while if the mortgage does indeed count towards that. 

[NC_Mtg_Loaner]

Do you have any "good" credit cards now?

How many "good" credit cards do you want?

How many credit cards do you already have?

....just curious

[Anonymous]

Well, I had to pass up on the really great Delta Skymiles offer earlier this year because I didn't want to have any new hard inquiries before my mortgage (and am now wondering when and if I'll get that kind of offer again), but aside from that I don't see how your line of questioning is relevant.

Is there anyone on this forum who's actually gone through getting a mortgage and knows how it affected their credit? Honestly I wasn't expecting crickets when I first asked. 

[thornback]

Mortgage loan balances are not counted in revolving utilization. That said, extra points are earned once loan util drops below 8.9%.... but that will likely take a while.

You may be dinged a bit for new account penalties... but not to a point of concern and you'll regain those points as the account ages. If the mortgage will be your only installment loan, it may even give you a few points for fulfilling your credit mix requirements. As for inquiries.. yes, those made with a specific time frame for the same type of loan should be considered as one.

You should be fine for obtaining new, "good" cards afterwards. The only other negative would be if the required monthly mortgage payment significantly increases your DTI - some lenders are super sensitive to high debt-to-income ratios (like over 30%). But this generally results in lower starting limits rather than outright denials.

Good luck with your new home!

[Anonymous]

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@thornback wrote:
Mortgage loan balances are not counted in revolving utilization. That said, extra points are earned once loan util drops below 8.9%.... but that will likely take a while.

You may be dinged a bit for new account penalties... but not to a point of concern and you'll regain those points as the account ages. If the mortgage will be your only installment loan, it may even give you a few points for fulfilling your credit mix requirements. As for inquiries.. yes, those made with a specific time frame for the same type of loan should be considered as one.

You should be fine for obtaining new, "good" cards afterwards. The only other negative would be if the required monthly mortgage payment significantly increases your DTI - some lenders are super sensitive to high debt-to-income ratios (like over 30%). But this generally results in lower starting limits rather than outright denials.

Good luck with your new home!

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Hi there! Could you please elaborate on that last part - why would my mortgage payments increase my DTI? 
And my mortgage will be twice the amount I make in a year. 

[thornback]

Because your DTI is the ratio of your total monthly debt (including the monthly minimum payments of all accounts - CCs, car loan, student loans, etc.) to your income (income before taxes - not on the amount you actually take home). So as you take on more debt, while your income remains the same, your DTI will, by nature, increase.

The total mortgage loan amount is usually 2x+ ones salary... that's normal - it's the monthly payments towards that balance that are used to calculate your DTI.

If your mortgage payments will be less than whatever you are currently paying for housing- then no worries.

Here's a calculator you can use to quickly estimate what your DTI may be after the mortgage... ideal is below 30%.

https://www.wellsfargo.com/goals-credit/debt-to-income-calculator/

[Anonymous]

Oh I see.

Thank you, this was helpful!