Rapid Credit Score Decline after Purchase

[Sean Thompson]

Hi all,

I purchased my first rental property, a 3bd/2bath condo in Raleigh, NC in May of this year. I had outstanding credit in the low 800s/high 700s prior to securing approximately 185K in a conventional mortgage loan after putting 10% down for a primary residence house hack.

Researching online, it looks like credit should drop approximately 15-40 points after acquiring a mortgage, but my credit shrank all the way to 685. I have no other major credit debt, ~10K between student loans and other pay as you go purchases. Not sure my debt to income ratio but I have > 150K in assets and my w2 is well above six figures. When I opened my credit report I see no suspicious activity that would warrant an 120 point decline.

Has anyone experienced this issue and if so how did you handle it? I want to continue to build my portfolio with at least another house hack in 2023, but concerned I won't get the best loans with this drop. Thank you for your feedback!

[Joe Minteer]

Last year I started my investing and my credit took a 60 point hit and still hasn't fully recovered with one of the credit rating companies. Mine was the same as yours. It's best to look at all of them and see if its across the board. Mine was low with one, but the others were fine. I'm about to see what mine will look like since I'm attempting to increase my HELOC to 150k, using a hard money lender the first time and increasing my Home depot card to cover a new heat pump. I've made 3 inquiries in a week, so I'll let you know where mine ends up.