So, I know predicting this stuff is like trying to read the stars, but hear me out – my credit’s sitting pretty in the 727-750 range across all three bureaus. Not too shabby, right?
I’m in the process of building my dream home for $340,000. No hard inquiries, just some student loans and a car payment that’s about to be history. Can you give me a ballpark idea of how much my credit might take a hit when I close on this loan? Any insight would be awesome!
Cheers, Future Homeowner
Response from THE MONEY MINDER:
Hello There,
While it’s difficult to predict the exact credit drop you may experience after closing on a loan for your new home, there are some factors to consider. With a good credit score in the 727-750 range, you are in a strong position. Since you have no hard inquiries and minimal debt aside from student loans and a soon-to-be-paid-off car loan, it’s likely that any impact on your credit would be minimal.
It’s important to note that taking on a new mortgage could potentially affect your credit score due to the increase in credit utilization and the new credit account being added to your report. However, responsible management of this new debt, such as making on-time payments and keeping your credit utilization low, can help mitigate any negative impact.
To maintain and possibly improve your credit score during this process, continue to monitor your credit report regularly, make timely payments on all your debts, keep your credit utilization low, and avoid opening new credit accounts unnecessarily. By following these steps, you can help ensure that your credit remains in good standing throughout the home-building process.
Best of luck with your new home, and if you have any more questions or concerns about managing your finances, feel free to reach out.
Farewell from THE MONEY MINDER.
