Kudos has partnered with CardRatings and Red Ventures for our coverage of credit card products. Kudos, CardRatings, and Red Ventures may receive a commission from card issuers. Kudos may receive commission from card issuers. Some of the card offers that appear on Kudos are from advertisers and may impact how and where card products appear on the site. Kudos tries to include as many card companies and offers as we are aware of, including offers from issuers that don't pay us, but we may not cover all card companies or all available card offers. You don't have to use our links, but we're grateful when you do!
Does Selling Your House Affect Your Credit Score?
July 1, 2025
Quick Answers
The act of selling your home does not directly affect your credit score, as the sale itself is not an event reported to credit bureaus.
Paying off your mortgage after the sale can cause a temporary dip in your score by closing a long-standing credit account and reducing your credit mix diversity.
Any missed mortgage payments during the selling process will negatively impact your credit, as payment history is the most significant factor in your score.
What Does It Mean to Sell Your House?
Selling your house is the formal process of transferring the legal ownership of your property to a buyer in exchange for a specific sum of money. This transaction is multifaceted, involving marketing the home, negotiating offers, and completing a significant amount of legal and financial paperwork. The process culminates at closing, where the property title is officially handed over to the new owner.
A major financial component of selling a home is using the proceeds to pay off your existing mortgage balance. Closing this substantial loan account can influence your credit score, as it alters your credit history and debt-to-income ratio. This is a standard outcome of settling a large debt and is a key part of the financial transition that occurs when you sell a property.
How Selling Your House Could Impact Your Credit Score
It might seem like a major financial move like selling your house would directly impact your credit score, but the sale itself doesn't. Instead, it's the related financial actions that matter.
Mortgage Payoff: When you sell your home, the proceeds are first used to pay off your outstanding mortgage balance. Your lender reports this account as paid in full to the credit bureaus.
Account Closure: The mortgage account, which is a type of installment loan, is then closed. This action is recorded on your credit report and can be a significant change to your credit profile.
Shift in Credit Mix: Lenders like to see a healthy mix of credit types (e.g., installment loans and revolving credit). Closing your mortgage could reduce this diversity, especially if it was your only installment loan.
Change in Account Age: If your mortgage was one of your oldest accounts, closing it can lower the average age of your credit history. A longer credit history is generally beneficial for your score.
How Much Will Selling Your House Affect Your Credit Score?
Selling your home doesn't directly impact your credit score, but related financial activities can. Here are a few key factors that could cause your score to fluctuate during the process.
- Paying off the mortgage. Closing this long-term installment loan can cause a temporary dip in your score. It reduces your credit mix and the average age of your accounts, which are key scoring factors.
- Missed mortgage payments. Falling behind on payments while your house is on the market will negatively affect your credit. Lenders report delinquencies to credit bureaus, which can lower your score significantly.
- Opening new lines of credit. Applying for new loans or credit cards before the sale is final can trigger hard inquiries. These inquiries can temporarily lower your credit score by a few points.
How You Can Avoid Selling Your House Affecting Your Credit Score
Stay Current on Payments
The most critical step is to continue making all mortgage payments on time until the sale officially closes. A single late payment can be reported to credit bureaus and lower your score, regardless of the pending sale. This ensures your payment history remains positive throughout the process.
Address Any Liens
Ensure all outstanding liens or judgments against the property are settled before or at closing. Unpaid debts, such as from contractors or tax authorities, can negatively impact your credit if they are reported. Clearing these debts is essential for a clean financial break from the property.
Verify Loan Closure
After the sale, monitor your credit report to confirm the mortgage account is marked as "paid in full" or "closed." Errors can happen, and an incorrectly reported open balance could harm your credit. Dispute any inaccuracies with the credit bureaus immediately to protect your score.
Ways to Improve Your Credit Score
Improving your credit score is an achievable goal, regardless of your starting point. With consistent, positive financial habits, you can boost your creditworthiness and unlock better financial opportunities.
- Monitor your credit reports. Regularly check your reports from the major bureaus for inaccuracies or signs of fraud, which you can obtain as free credit reports to track your progress.
- Establish automatic bill payments. Your payment history is the most significant factor in your score, so setting up automatic payments ensures you never miss a due date.
- Reduce your credit utilization ratio. Aim to keep your credit usage below 30% of your available limit by paying down balances or requesting a credit limit increase.
- Become an authorized user. Being added to a credit card account with a long history of on-time payments and low utilization can give your score a boost.
- Diversify your credit mix. Lenders like to see that you can responsibly manage different types of credit, such as a mix of credit cards and installment loans.
- Limit hard inquiries. Avoid applying for too much new credit at once, as multiple hard inquiries in a short period can temporarily lower your score.
The Bottom Line
Selling your home doesn't directly affect your credit score. The primary influence on your score comes from paying off the mortgage and how you handle your finances throughout the process.
Frequently Asked Questions
Does selling my house directly affect my credit score?
No, the act of selling your home does not directly impact your credit score. The transaction itself is not reported to the major credit bureaus.
What happens to my mortgage on my credit report after I sell?
Once your mortgage is paid off from the sale proceeds, the account will be marked as "closed" or "paid in full," which can positively reflect your credit history.
Can selling my house for a low price hurt my credit?
Only if you sell for less than you owe in a short sale. This can negatively impact your score because the original loan was not fully repaid.
Supercharge Your Credit Cards
Experience smarter spending with Kudos and unlock more from your credit cards. Earn $20.00 when you sign up for Kudos with "GET20" and make an eligible Kudos Boost purchase.
Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
