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Study: Credit Scores Rebound Quickly After Home Purchase

Nationwide credit scores fall about 20 points in the months following a home purchase, but they bounce back fully in less than one year. In four Fla. cities included in a LendingTree study, the full credit-score rebound ranged from 332 days in Miami to 387 in Jacksonville.

WASHINGTON – Credit scores take a hit after a homebuyer takes out a mortgage, but a study from LendingTree shows credit scores rebound within a year.

Credit scores are unlikely to fall no more than 20 points, on average, in the four and a half to six months after getting a mortgage. And even credit scores that fall by more than that average 20 points tend to fully rebound to pre-mortgage levels within a year.

After closing on a mortgage, credit scores nationwide took an average of 165 days to reach their lowest points. Average credit scores fell the fastest in Richmond, Va., taking about 137 days to hit its lowest point, while San Jose, Calif., had the longest decline at an average of 189 days.

In four Florida cities included in the study, credit scores averaged 730 before buying a home. After the purchase, the scores took 169 days to drop an average 20.9%. However, the credit scores then started to rebound, and the impact of a home purchase was completely gone in slightly less than a year – 351 days.

Florida cities’ credit score averages after home purchase

  • Tampa: The average 732 score dropped an average 17.65 points to 714. It took 168.15 days to reach a low point and 349 to fully recover.
  • Miami: A 727 score dropped an average 21.72 points to 705. It took 162.5 days to reach a low point and 332 days to fully recover.
  • Jacksonville: A 720 credit score dropped an average 22.1 points to 707. It took 108.66 days to hit a low point and 387 days to fully recover.
  • Orlando: A 732 credit score dropped an average 22.1 points to 710. It took 165.75 days to hit a low point and 338 days to fully recover.

“The complete credit cycle – the time it takes for scores to decline and then rebound – is 339 days, on average,” the LendingTree study notes. “This means that borrowers across the country can typically expect their credit scores to return to their starting points in a little under a year.”

Source: “Buying a Home Will Hurt Your Credit Score, But Data Shows It’ll Rebound Within a Year on Average,” LendingTree (Sept. 28, 2021)

Source: 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

© 2021 Florida Realtors®

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