Your credit score is impacted by each financial move you make in regards to debt. Paying down any debt, especially mortgage debt, will help to raise your score bit by bit.
Significance
Your credit score is a numerical indicator to a lending institution as to what risk you might hold when lending you money. The higher your credit score, the better chance that the lending institution has of getting prompt and full payment. Therefore, you want to make financial decisions, such as paying down your mortgage, that will positively impact your credit score.
Types
There are three credit bureaus: Experian, Equifax and TransUnion. Your mortgage debt is recorded with all three bureaus; however, each calculates your score differently. Even if exactly the same information is reported to all three bureaus, you will have three different credit scores.
Time Frame
A large principal down payment on your mortgage will positively affect your credit score. Additionally, the longer the time span from the date you opened a new mortgage, the more positive impact your payments will have on your score. There is no set time span on when a large payment will affect a score but a normal time span is 30 to 60 days.
Considerations
The larger the difference between the initial loan and the current balance of the loan, the more positive impact your on-time monthly payment will have on your credit score. Even if you have been prompt in your monthly payments, a new mortgage loan (less than a year) will have a negative affect on your credit score.
Warning
Any late payment on your mortgage of 30 days or more will have a large negative affect on your credit score. A 60 or more days late payment will have an even larger negative affect on your credit score. To protect your credit score, always pay your mortgage bill on time.
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