Why Your Credit Score Dropped After Buying a House

Did your credit score suddenly drop by at least 100 points after buying a house? Or did your credit rating go from an excellent to good or fair? There are a number of reasons why a credit score can drop after the purchase of a new home. It’s nothing to worry about as long as you continue to maintain healthy financial habits.

Hard and soft credit checks

Your credit score will take a hit every time there is a soft or hard enquiry on your credit record. This could be done multiple times throughout the purchase of a house, such as when homebuyers apply for a mortgage or when they apply for telecom or energy services.

Updating the electoral register

The electoral register provides a list of individuals who are registered to vote. It will contain information such as the individual’s name and residential address. Your credit score could drop if you haven’t yet updated your new address in the electoral register. Make sure any active accounts or registers you are part of are updated to reflect the address of the new home.

Closing established accounts

This may sound odd but the closure of financial accounts could also contribute to a drop in credit score. Closing an established bank or credit card account, for example, could lead to a drop in credit score.

In most cases, credit scores in the UK are quite meaningless so you shouldn’t worry about how a lower credit score may impact your borrowing power. You should be able to gradually get the score back to where it was as long as you maintain the same habits that got you that high credit score to being with.