The short answer is it affects your credit rating in a very powerful way.
The mortgage effect
A home is a primary “big ticket” purchase in someone’s life. Everyone needs housing, and a mortgage is the way to own a home.
Because of this, your mortgage is also the largest beacon of your credit report and credit rating. The better you do on your payments to that line of credit, the better your credit rating is for other things. The worse you do with payments, the more negative the impact on your credit rating.
How can I keep a positive credit rating?
Your payment history influences your score the most. A consistent payment will continue to build your credit for the life of the loan. Make payments on time and during the same time period, and everything gets better and better with your credit rating.
Conversely, sporadic or late payments can result in a lower rating.
This is a reason why we always say that mortgages are the largest impact on credit ratings. As stated before, people need housing. By being late or making sporadic payments to your home, this is viewed as how you could likely handle other loans and credit accounts.
What else should I know about how mortgages affect my credit rating?
Additionally, mortgages have a “seasoning” effect on your credit score.
Brand new mortgages have a tendency to lower your score as often times borrowers are over-extended. The longer and more consistent payments you make, your score will continue to increase.
With that said, don’t panic if your credit rating drops for the first few months after starting a mortgage. This will likely balance out after a while – and your credit rating will grow positively over time.