Homeowners' credit scores recover fastest in these cities
Ramsey Solutions financial expert Chris Hogan discusses the new survey from Bankrate.com, which shows that homeowners think it’s a good idea to tap into the value of their homes to pay bills and the best time for millennials to buy a house.
When homeowners take out a mortgage for the first time, the significant debt often causes individuals’ credit scores to decline over the near term.
Credit scores will recover over time as payments are made, but the rate at which consumers saw the bounce back varied among the country’s largest 50 cities, according to a survey from LendingTree.
On average, nationwide credit scores fell by 15 points, though some respondents saw theirs drop by as much as 40 points. It took an average total of 11 months for homeowners across the nation to see their scores complete the decline and recovery.
These are the cities where homeowners saw their credit recover the fastest, according to LendingTree.
Richmond, Va.
The average credit score for homeowners in the state is 693. When residents took out a mortgage, they saw their scores decline by an average of 13 points.
In Richmond, it took about 266 days until credit scores recovered to their pre-mortgage levels.
Minneapolis
When individuals in Minneapolis took out a mortgage, they saw their credit scores reduced by an average of 11 points. The average score in the city is about 701.
It took about 267 days before residents see their scores recover those 11 points.
Salt Lake City
Residents saw their average credit scores – 704 – decline by an average of 15 points after they took out a mortgage in Salt Lake City. It took an average of 272 days for those numbers to snap back into place.
Providence, R.I.
The average credit score among residents in Providence, R.I., is 691 points – which was reduced to 679 after an individual took out a mortgage.
In about 275 days, a homeowner was able to achieve pre-mortgage credit score levels.
New Orleans
Credit scores in New Orleans decline for an average of 133 days – taking 147 more to recover, which means the average credit score takes a hit over the course of 280 days.
Slowest to recover
Among the cities where it took longest for residents to see their credit scores recover are Milwaukee – 385 days – Austin, Texas – 377 days – and Riverside, Calif., 375 days.