LendingTree's Chief Economist weighs in.

Perri Ormont Blumberg
November 28, 2018
Jacobs Stock Photography Ltd/Getty Images

Recently, LendingTree, the North Carolina-based consumer lending company shared an analysis of a survey of 5,000 consumers who took out a mortgage, looking at how their credit scores were impacted in the months that followed. Interestingly, they found that scores fall for at least four months after buying a home. After this initial dip, credit score recovery takes at least another five months.

Buy why? Tendayi Kapfidze, Chief Economist at LendingTree, explained the phenomenon to Southern Living: "Buying a house with a mortgage lowers your score because the balance of money you owe increases by a very large amount. As you make timely payments, the score recovers as you demonstrate the ability to service such a large obligation," says Kapfidze. "In sum, taking out a mortgage will ultimately improve your credit as long as you meet your mortgage payments."

If you want to do something about this immediate side effect of taking out a mortgage, you're out of luck. However, you can use the time frame after buying a home to "focus on other areas of your credit profile to make sure your score doesn’t fall further," notes Kapfidze. "About 10% of your credit score depends on recent credit applications and inquiries. To evaluate your application, lenders have to do a hard inquiry in your credit which temporarily lowers your score. About 30% of the score depends on total credit owed, so the when the mortgage balance comes online, your score takes a hit."

Some smart tips to keep in mind? "Payment history is 35%, so keeping on top of payments — including credit cards and any other loan obligations — will strengthen scores over time. Avoid applying for new credit and keep your credit card balances low. Being vigilant about setting aside money for unexpected expenses helps to reduce the risk of needing additional credit, and thus, additional credit pulls and added balances," advises Kapfidze. "This could be a challenge when you have moving expenses and a new house to furnish, but using as little of your available credit as possible is key to improving your credit score. The closer you get to maxing out your credit cards, the more your credit score will drop. And, of course, make sure you make on-time payments for all your debts."

WATCH: 6 Things Nobody Tells You About Buying A House

Kapfidze stresses the importance of not "biting off more than you can chew” when it comes to borrowing money. "Having a manageable mortgage loan means there is less risk of missed [or[ late payments. Knowing what you can afford, consistency, and taking into consideration all other debt are essential to sticking to a realistic and manageable budget."

If you're soon to be a new home buyer, check out the basics of buying a home.