logo
Home Loans
Calculators
Resources
Partner with Us
Find Properties
Free Credit Report
Home > Home Loan > Learn > What is the Impact of your Home Loan on your Credit Score History?

What is the Impact of your Home Loan on your Credit Score History?

April 17, 2025
Table of Contents

How do home loans really affect your credit history? Can a home actually boost your credit score, or is it more likely to cause harm? These are the very questions many potential borrowers are asking.

In today’s post, we’ll explore the statistics behind home loans and credit profiles, breaking down the factors that can lead to a boost in your credit score.

The Initial Impact: The Hard Pull

When you first apply for a home loan, lenders perform a thorough credit check known as a “hard inquiry.” This typically causes a temporary dip in your credit score, usually between 5-10 points.

While this might seem concerning, it’s important to understand that multiple mortgage-related inquiries within a 14-45 day period are typically counted as just one inquiry by credit scoring models, allowing you to shop around for the best rates without multiple penalties.

Suggested Read: How to Improve Credit Score with a Credit Card

The Positive Long-Term Effects

A home loan can strengthen your credit score over time if managed responsibly. Regular EMI payments and a long credit history boost your financial credibility.

Building a Positive Payment History

  • Consistently making mortgage payments on time can boost your credit score significantly.
  • A long-standing home loan with zero late payments signals financial stability to lenders.

Enhancing Credit Mix

  • Having diverse types of credit (e.g., credit cards, auto loans, mortgages) is a positive factor.
  • A mortgage can add an installment account to your credit profile, which is especially helpful if your existing credit lines are mostly revolving accounts.

Length of Credit

  • Mortgage loans typically span 15 to 30 years, and having a well-maintained long-term account boosts the average age of your credit.
  • A longer credit history with timely payments can be a cornerstone of a very strong credit score.

Suggested Read: How to Get a Home Loan without a Credit Score?

Potential Pitfalls and How to Avoid Them

A home loan can strengthen your credit score over time if managed responsibly. Regular EMI payments and a long credit history boost your financial credibility.

Missed or Late Payments

  • Late payments on a mortgage can severely damage your score.
  • Tip: Set up autopay or reminders to ensure you never miss a due date.

Refinancing Risks

  • While refinancing might lower interest costs, it restarts the mortgage clock and can introduce new inquiries, potential closing costs, and a reset in the average account age.
  • Opinion: Only refinance when it provides a meaningful interest rate reduction or better terms, and carefully weigh any short-term hits to your credit score.

Over-Borrowing

  • A mortgage that’s too large relative to your income can strain your monthly budget, leading to missed payments on other obligations.
  • Tip: Aim for a mortgage payment (including taxes and insurance) that is no more than 28–30% of your gross monthly income, although the precise figure will vary depending on your personal circumstances and market conditions.

Housing Market Fluctuations

  • In recent years, interest rates and housing prices have seen significant changes. High rates can tempt buyers to stretch their budgets.
  • Opinion: A slightly smaller home or a lower interest rate can provide breathing room in the long run—sometimes the “dream house” is one that fits comfortably in your budget rather than at the very top of it.

Suggested Read: Impact of Frequent Job Changes on Credit Score

Conclusion

Buying a home is a big step. Getting a home loan can be hard, but we make it easy. Choosing Credit Dharma for your home loan simplifies this process. We offer expert advice and personalized assistance to make everything hassle-free. You’ll receive timely updates on your loan application and disbursement progress.

From the initial application to the final disbursement, we provide comprehensive support. Enjoy clear and honest communication at every stage, with no hidden surprises.

Frequently Asked Questions

How does taking a home loan impact your credit score?

A home loan can improve your credit score if repaid on time, but missed payments can negatively affect it.

What role does a CIBIL score play in getting a home loan?

A high CIBIL score increases your chances of loan approval with better interest rates, while a low score may lead to rejection or higher rates.

Can owning a house influence your credit score?

Owning a house does not directly affect your credit score, but a home loan linked to it does.

Do loans have an effect on your credit score?

Yes, loans impact your credit score based on repayment history, credit utilization, and loan tenure.

Will a home loan help boost your credit score?

Yes, timely EMI payments can improve your credit score by demonstrating responsible credit behavior.

Why did my credit score decrease after clearing my home loan?

Paying off a mortgage can reduce your credit mix and credit history length, temporarily lowering your score.

What are the five key factors that influence your credit score?

Payment history, credit utilization, credit age, credit mix, and the number of hard inquiries affect your credit score.

Compare Home Loans
from Top Banks

HDFC Home LoanHDFC Home Loan
VS
SBI Home LoanSBI Home Loan
credit dharma home loan
credit dharma referral
  • Compare Popular Banks
  • HDFC vs SBI Home Loan
  • HDFC vs ICICI Bank Home Loan
  • Tata Capital vs HDFC Home Loan
  • SBI vs ICICI Bank Home Loan
  • HDFC vs Kotak Mahindra Home Loan
  • Bank of Baroda vs SBI Home Loan
  • HDFC vs Axis Bank Home Loan
  • SBI vs IDBI Home Loan
  • Recent Posts
  • Bank of India Star Home Loan – Furnishing
  • Bajaj Housing Finance Home Loan Processing Fees and Other Charges
  • Bajaj Housing Finance Home Loan Pre Payment Calculator
  • What is the CIBIL Score Required for Bank of India Home Loan Approval?
  • HDFC Bank Home Loan Interest Rates 2025
  • Related Posts
  • Affordable Housing Options in Mumbai for First-Time Home Buyers
  • A Revised Look at Home Loan Co-Borrowers in 2024
  • A Comprehensive Guide To Government Employee Home Loan Programs
  • Types of Interest Rates: Fixed, Floating, or Hybrid
  • 2024 Guide to Home Loan Interest Rates
  • Stamp Duty and Registration Charges in Goa 2025
  • Stamp Duty and Registration Charges in Chhattisgarh 2025
logologo
Fast. Transparent. Spam Free.
Getting a home loan in India is none of the above.
At Creditdharma we are changing that and making your home buying journey stress free. Top Experts, Best Banking Partners and Super Easy Process.
Quick Links
Blogs
Home Loan Eligibility
Balance Transfer
Calculators
About Us
Partner with Us
Become an Advisor
Properties
Glossary
IFSC Code Search
Refer & Earn
Free Credit Report
Home Loan Score
Help
Sitemap
Get in Touch
Enzyme Office Spaces , 27th Main, 480/B, 18th Cross Road, HSR Layout, Bengaluru, Karnataka 560102
linkedininstatwt/x
General Enquiry
contact@creditdharma.in

Home Loans From Top Banks

SBI

SBI Home LoansSBI Home Loan EMI CalculatorSBI Home Loan Eligibility CalculatorSBI MaxGain Home LoansSBI Privilege Home LoanSBI Home Loan StatementSBI Home Loan Customer Care

HDFC

HDFC Home LoansHDFC Home Loan EMI CalculatorHDFC Home Loan Eligibility CalculatorHDFC Loan Against PropertyHDFC Home Loan with Overdraft FacilityHDFC Home Loan StatementHDFC Home Loan Customer Care

LIC Housing Finance

LIC Housing Finance Home LoansLIC Home Loan EMI CalculatorLIC Home Loan Eligibility CalculatorLIC Plot Loan DetailsLIC Home Loan StatementLIC Home Loan Customer Care

Bank of Baroda

Bank of Baroda Home LoansBank of Baroda Home Loan EMI CalculatorBank of Baroda Home Loan Eligibility CalculatorBank of Baroda Loan Against PropertyBank of Baroda Home Loan StatementBank of Baroda Home Loan Customer Care

IDBI Bank

IDBI Bank Home LoansIDBI Bank Home Loan EMI CalculatorIDBI Bank Home Loan Eligibility CalculatorIDBI Bank Home Loan Interest RatesIDBI Bank Home Loan StatementIDBI Bank Home Loan Customer Care

ICICI Bank

ICICI Bank Home LoansICICI Bank Home Loan EMI CalculatorICICI Bank Home Loan Eligibility CalculatorICICI Bank Home Loan Top-UpICICI Bank Home Loan StatementICICI Bank Home Loan Customer Care

AXIS Bank

AXIS Bank Home LoansAXIS Bank Home Loan EMI CalculatorAXIS Bank Home Loan Eligibility CalculatorAXIS Bank Loan Against PropertyAXIS Bank Home Loan StatementAXIS Bank Home Loan Customer Care

BAJAJ Housing Finance

BAJAJ Housing Finance Home LoansBAJAJ Housing Finance Home Loan EMI CalculatorBAJAJ Housing Finance Home Loan Eligibility CalculatorBAJAJ Housing Finance Sambhav Home LoanBAJAJ Housing Finance Home Loan StatementBAJAJ Housing Finance Home Loan Customer Care

Resources

Best Home Loans in Your City

Home Loans in BangaloreHome Loans in HyderabadHome Loans in MumbaiHome Loans in DelhiHome Loans in ChennaiHome Loans in JaipurHome Loans in Pune

Home Loans by Amount

Home Loan for 40 LakhsHome Loan for 45 LakhsHome Loan for 50 LakhsHome Loan for 55 LakhsHome Loan for 60 LakhsHome Loan for 65 LakhsHome Loan for 70 Lakhs

Home Loans by Salary

Home Loan for 40,000 SalaryHome Loan for 50,000 SalaryHome Loan for 60,000 SalaryHome Loan for 70,000 SalaryHome Loan for 80,000 SalaryHome Loan for 90,000 SalaryHome Loan for 1 Lakh Salary

Trending Home Loan Options

Home Loans for Salaried IndividualsHome Loans for Business OwnersPlot cum Construction LoansLoan Against Property DetailsHome Loan Top-Up DetailsHome Loan for NRIsHome Loan Without ITR Documents

Tools

Home Loan EMI CalculatorHome Loan Balance Transfer CalculatorCompare Home LoansHome Loan Eligibility CalculatorBuy vs Rent CalculatorFind Branch Details with IFSC CodeHome Loan Tax Benefits CalculatorFOIR CalculatorCheck Your Credit ScoreHome Loan Prepayment CalculatorHome Loan Insurance CalculatorProperty Budget CalculatorHome Loan with Overdraft CalculatorCapital Tax Gains CalculatorExplore CD Approved PropertiesPlot Loan EMI CalculatorRental Yield CalculatorHome Loan Downpayment Calculator30-30-30-10 Calculator

Compare Home Loans

HDFC vs SBI Home LoansHDFC vs ICICI Home LoansHDFC vs BAJAJ Housing FinanceSBI vs AXIS Home LoansBank Of India vs SBIBank of Baroda vs AXIS BankHDFC vs Bank of BarodaSBI vs IIFL Housing FinanceSBI vs ICICI BankSBI vs BAJAJ Housing FinanceAXIS Bank vs ICICILIC vs SBI Home Loans

Best Home Loan Offers

Best Banks for a Home Loan Balance TransferBest NBFCs for a Home LoanBest Small Finance Banks for Home LoansBest Housing Finance CompaniesBest Public Sector BanksBest Options for Independent Properties
© Copyright Tres Commas Technologies Pvt. Ltd.
CIN : U72900KA2021PTC143997
Privacy Policy | Terms & Conditions
Disclaimer : The information contained in this website is presented purely for information purposes only provided as service to the internet community at large. It does not constitute insurance advice and we do not guarantee the accuracy, adequacy or the completeness of the information contained here.
Loading...