At a Glance

Selling your house can have a significant impact on your credit score. Depending on the amount of the proceeds you receive, it can be considered a source of income and added to your debt-to-income ratio, which can help boost your score. On the other hand, listing the home for sale and incurring costs associated with closing may affect your credit adversely in some cases if lenders view an applicant as “excessively indebted” when considering mortgage applications.

Additionally, if a bad debt is attached to the property, such as a lien or outstanding loan balance, it could remain on your credit report until you prove it has been paid off or assume responsibility by paying it off yourself. Overall, selling a house can have positive and negative implications for one’s financial standing, so consulting a professional before making this move is wise.

What is a credit score?

A credit score is a three-digit number that summarizes your credit history and gives lenders an indication of how likely you are to pay back any loans or debts. This score can range from 300, the lowest possible rating, to 850, the highest possible rating. Credit scores are calculated from data pulled from credit reports; these reports contain information such as current and past debt obligations, payment history, and even public records. A good credit score is essential for obtaining a loan at a reasonable rate; without one, it can be challenging to take out a loan with favorable terms or even get approved. Understanding your credit score and taking action to improve it is an important part of managing personal finances responsibly.

Related: What is a Good Credit Score?

How can selling a house improve your credit score?

Selling your house means that you no longer owe a large chunk of money to a creditor, which can improve your debt-to-income ratio and, in turn, your credit score. Despite the initial costs associated with buying a home and the potential taxes and expenses of selling, you may find that the improved credit score outweighs these factors in the long run. Owning real estate is often seen as a sign of financial stability, which can open many different personal and professional doors, so it might be worth it to purchase another home after selling your current one.

Can selling a house hurt your credit?

Selling a house may seem like an easy way to cash in on a hefty profit or use the money to buy a new home, but most people don’t realize that selling a house can affect their credit. A homeowner must pay off existing mortgage loans and clear all liens against the property when selling their home. If they cannot make the payments in full, this could negatively affect the homeowner’s credit score. In addition to owing money on a house mortgage, any open lines of credit with unfinished payments and unpaid utility bills can have further consequences. Homeowners should be aware of potential risks when selling their homes, especially if they’re struggling financially. Otherwise, they may end up risking their credit score and financial stability.

If you have put your credit score at risk by selling your house and want to get a better handle on it, you have options.

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One way to help determine how a sale can impact your credit is figuring out if you have equity in your home, and if so, how much. If you have substantial equity in your home, that means the value of the house is greater than the amount you have remaining on your mortgage. This allows you to sell your house for a profit. However, if your mortgage is more than the value of the home for whatever reason, selling your home could get you in more debt, because you must pay off the mortgage when you transfer the home to a new owner.

Does a house sale impact your payment history?

The answer is there is no straightforward answer regarding the impact of a house sale on your payment history. To determine whether a house sale affects your payment history, you must look at timelines and other important factors, such as your preferred credit score formula and what type of loan you ultimately have. Generally speaking, if you have closed a loan before selling the home, any lingering loan should not affect your payment history since you made all payments before the sale. On the other hand, when it comes to settling an existing mortgage after closing on a new residence, there can be an effect on your payment history depending on how this transaction is handled. Therefore, it’s essential to consider these key elements when considering a house sale’s impact on your payment history.


Your credit score reflects your ability to manage credit responsibly and pay bills on time, so when you sell a house, it could potentially impact your score. When the loan comes due and is paid off after selling the home, it often looks like an immediate loan payoff, which can temporarily lower your score while updating.
However, this shows that you could make payments on time and eventually pay off the loan in full—both signs of good credit management—which can improve your overall score in the longer term. A mortgage is generally good for your credit score if you make monthly payments on time and do not have substantial debt elsewhere. So, another important consideration is whether you are getting into a new mortgage after selling your house or just taking the proceeds to the bank.

Selling a house is a significant financial investment, and it can leave many wondering how long it will take for their credit score to be positively impacted. Fortunately, the answer largely depends on the positive payment history maintained before the sale. If all payments have been made promptly, credit scores have been known to increase days after the mortgage has been paid in full and the deed of title transfers over.
On the other hand, if negative payments have been made throughout the years of owning a home, impacts on your credit score may not become noticeable until 6-12 months later once these entries cycle off your credit report. Nevertheless, with diligence and consistency when making payments, you should start seeing an upswing in your credit score relatively quickly after selling a house.

The period it takes for a home to show up on your credit report after closing is typically about two months. As soon as you close on a home, it is reported to the credit bureaus by the lender who provided you with the loan. Depending on how often they report information and when they report, it may take a while before the new loan appears on your credit report. To ensure accuracy, it is essential to keep an eye out for your reports during this time frame.