Does selling your house affect your credit score?

There are lots of reasons that you might be selling your house. Maybe you’re planning to buy a new one, downsizing to a smaller property, or prefer to rent instead of paying a mortgage so a landlord can deal with maintenance responsibilities.  ‍

Whatever the reason, it can be stressful and worrying to uproot and swap the roof over your head. Your mortgage is often your biggest debt so it’s normal to have some anxiety whenever it changes.

Because your mortgage is such a substantial loan, creditors consider it a useful factor when assessing your creditworthiness. But does selling your house affect your credit score? The truth is it depends on the type of sale, whether you’re taking out a new mortgage, and how you’ve managed your mortgage payments until now. Let Loqbox unpack it for you!

Does selling your house help your credit score?

You might be wondering whether selling your house will help your credit score? Well, when you sell your house and pay off your mortgage in full, it does! This shows you’re able to manage large amounts of debt, and allows lenders to view you as more desirable to lend to.

You could keep that momentum going by getting another mortgage. Showing off your positive record of mortgage payments like a shiny badge of honour! ! 

If you sell your house and don’t take out a new mortgage, by buying a house in cash or moving into a rental property, you won’t get the benefit of regular mortgage payments working for your credit history anymore. This could lower your score over a number of years if you don’t manage your other finances well.

How do I check my credit score after I sell my house?

If you’re not sure whether selling your house has affected your credit score, you can find out for free and without negatively impacting it, by clicking using one of these recommended providers:

ClearScore (uses Equifax data)*

Experian App (uses Experian data)

Intuit Credit Karma (uses TransUnion data)

*All of these options are great, but we just wanted to mention that if you sign up for ClearScore using this link, we earn a small commission.

Why did my credit score drop after selling my house?

Selling your house is unlikely to impact your credit score just by itself. But it is common to see your credit score dip when you relocate to a new home. Practical things that can affect your credit score include:

• opening new utility bill accounts, 
• registering with your new address on the electoral roll, 
• not updating each bank, credit or bill provider you use to let them know of your house move (this show inconsistencies on your credit reports, read here about fixing those). 

Once these have been set up (or fixed in the case of the latter point) it should only need six months of showing you can handle credit well before your credit score starts to reset. So don’t worry.

If however, you sold your property for less than the mortgage value, it could be a different story. This is called ‘negative equity’ and it’s very likely to have a negative impact on your credit score because you will still be in default for the remaining balance on the mortgage.

The mortgage lender may try to reclaim the remaining debt. So your credit score could be damaged even further if the creditors sue you for the difference. But that is rare — typically you would have already asked permission from them before making a decision to sell in negative equity.

You can also build your score while you save with Loqbox Save, or while you spend on a 0% credit account with Loqbox Grow.

How do I improve my credit score without a mortgage?

‍It’s important to say that not having a mortgage won’t negatively impact your credit score. If you don’t have a mortgage you can still build a great credit score in other ways. In the unlikely event that your credit score drops after you sell your house, or if you just want to improve your score without having a mortgage, why not get started with Loqbox?‍

If you’ve sold your house and entered into a rental contract, you can actually use those regular rent payments to improve your credit history — much like mortgage payments — with Loqbox Rent.