TheMReport

TH E M R EP O RT | 49 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA What's the Score? A LendingTree study examines the hit buyers take to their credit score after purchasing a home. B uying a home is the biggest purchase most consumers will ever make, and many buyers will feel the impact of applying for a mortgage on their credit score long after moving in. A report from LendingTree shows that credit scores will eventually recover, but how quickly? LendingTree found that on average, credit scores fell by 15 points over a nearly five-month period following a mortgage, and it took an average of another five months to return to prior levels. "Mortgages do not appear on credit reports immediately after closing," said Tendayi Kapfidze, Chief Economist, LendingTree. "Typically, the mortgage lender starts reporting to the credit bureaus after your first payment and depending on the lender's reporting cycle. Thus, it may take about 60 days after closing or even longer for it show up and start affecting a score." The site also identified which cities saw the fastest rate of credit score recovery following a mort- gage. At the top of that list was Richmond, Virginia, where credit scores took an average of 266 days to recover, and scores saw a 13 point average decline. Other fast-re- covering cities include Minneapolis and Salt Lake City, where mortgage borrowers could see their credit scores recover in an average of 701 or 704 days, respectively. On the opposite end, Milwaukee saw the longest recovery times, with credit scores taking an average of 384 days to recover following a mortgage, followed closely by Austin and Riverside, California, where credit scores recovered in 377 days and 375 days, respectively. "As time passes, making on- time payments helps a borrower improve their credit score as they demonstrate they are manag- ing their new mortgage account well," Kapfidze added. "Having a mortgage also increases the diversity of accounts in the credit file, which also boosts the score. Eventually, the score returns to its premortgage level and in most cases, surpasses it."

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