You might be wondering if selling your house would improve your credit score. The truth is that there are several ways by which your credit can be affected if you sell your home.
When you sell your home and use the money to fully pay your mortgage, the paid mortgage will be a part of your credit report, which will stay there for ten years from the time you spend it. But if your mortgage payments have an adverse history, this negative information will also stay on your credit report for seven years if you have missed your mortgage payments.
Let’s begin with the most obvious question:
What is Credit Score?
A credit score measures your creditworthiness. Depending on your credit reporting bureau, it is between 0 to 1,200 or between 300 to 850.
If you have a high credit score, you will look good to lenders. Lenders use credit scores to assess whether you will be able to repay your loans on time.
Why is Credit Score Important?
As we have mentioned above, your credit score will be used by potential lenders to assess whether they will approve your loan application or any other form of credit.
A high credit score will give you a good chance of getting a loan. If you have a low credit score, finding a lender will be more challenging to provide you with credit will be more difficult.
If you are going to sell your house, remember that it is not only your ability to obtain loans and credit cards that your credit affects. Other things are affected by your credit score.
It can impact your insurance premiums and even affect your possible employment. Some employers check on credit scores when hiring employees. If you have a low credit score, you might not be considered for the job.
Will Selling House Improve Credit Score?
Selling your house may have little or no effect on your credit score.
Even if you have a positive credit history, your house sale will not help it in the long run. Your credit score may change, but this depends on your circumstances.
When you pay off your mortgage with your house sale, your repayment history will stay on your file and will not have a big impact on your credit score.
It doesn’t hurt your credit score if you don’t have a mortgage. But it doesn’t help it either. But if you do have a mortgage, you might gain some points.
When will Sell a House Improve Credit Score?
One way of improving your credit score with your house sale is by obtaining a mortgage for a new home. This is especially true if you keep a good payment history on your new mortgage. This can significantly help raise your credit score.
It is when making payments on time that improves your credit score. You should not be late when it comes to paying your mortgage or any of your debts. The history of your mortgage payments is the first thing lenders look for on your credit report.
Another way to improve your credit score through your house sale is by using the extra funds to pay some of your other debts.
Even if you pay off your mortgage, your credit score can still be negatively affected if you have other high debts. But if you pay off your credit cards and reduce your credit limit, it can help raise your credit score.
When will Selling a House Worsen Your Credit Score?
If, after selling your house, you choose to rent instead of buying another, then it can have a negative impact on your credit score. If you no longer have a mortgage, your current credit risk cannot be measured by lenders. So, not having a mortgage could be seen as unfavorable.
Another way that selling your house can worsen your credit score is when you opt for a short sale. A short sale means selling your house for a lesser amount than what you owe on the mortgage. This will make your credit score worsen.
So, before deciding on selling your house, consider your options carefully. If your only option is to sell your home short, then you should be ready to find ways to build up your credit over the next several years.
How do I sell my House Fast?
If you have decided on selling your house, and you want to sell it fast, then your best option is to find a cash house buyer or a real estate investor instead of using the services of a real estate agent. There are many reasons and benefits why you should do this.
One good reason to sell your house to a real estate investor is that you will have a stress-free experience selling your house. You don’t have to undergo long procedures and processes, but their solutions are simple and direct.
All you need to do is to contact your cash house buyer. Your home will be inspected, and in a matter of hours, you will be given a free no-obligation all-cash offer. You only need to accept the offer, and your house is good as sold, for cash! You can even choose the close date.
Another good thing about cash house buyers is that you don’t need to make repairs or renovations on your home. They buy houses as-is. So, this means great savings for you. Whatever structural or regulatory issues you have on your home, it will not matter.
Even if your house is almost getting foreclosed, has tax liens, has tenants, is fire damaged, or is flood-damaged, cash house buyers will still buy it, even if the house is uninhabitable.
With cash house buyers, you don’t need to worry about anything. The company will accomplish all paperwork. And they can close the sale in as little as seven days because they don’t need traditional financing. They buy houses with cash.
Selling your house may or may not improve your credit score. If you need to sell your house fast today, choose a real estate investor or a cash house buyer and get paid in a short amount of time.
You can then use the money to pay your mortgage and debts and improve your credit score.