So you went through the process of selling your house in South Jersey. Congratulations! But now you might be wondering if that “Sold” sign translates to a ding on your credit report. The short answer: selling your home typically doesn’t directly hurt your credit score.
Let’s break down why:
- Positive Payment History Stays: Your credit score is heavily influenced by your history of on-time payments. Selling your house doesn’t erase your past mortgage payments, which are positive factors on your credit report.
However, there are a couple of scenarios where selling a home could indirectly impact your credit:
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Short Sale: If you sold your house for less than the amount owed on your mortgage (short sale), it can negatively affect your credit score. This is because a short sale is reported to credit bureaus and can stay on your report for up to seven years.
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Credit Length Impact: A long, well-managed mortgage can positively impact your credit score due to its contribution to your credit history length. Selling your house eliminates this positive factor. However, the impact is usually temporary, and responsible credit management of other lines of credit can help rebuild credit history length.
Here are some additional things to consider:
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New Debt: If you use the proceeds from selling your house to go into significant debt (furniture, car loan, etc.), this can negatively affect your credit utilization ratio (amount of credit used compared to total credit limit) and ultimately lower your score.
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New Mortgage: If you’re planning to buy another home, your credit score will be a crucial factor in qualifying for a new mortgage.
Living in South Jersey? Here are some resources to help:
- Free Credit Report: You can get a free credit report from each of the three major credit bureaus annually at Annual Credit Report
Overall, selling your South Jersey home shouldn’t directly hurt your credit score. However, be mindful of potential indirect impacts and focus on responsible credit management. For any lingering credit concerns, consulting a credit counselor or financial advisor is recommended.