Short answer: usually a small dip first, then a meaningful lift. The dip is the part people worry about and the lift is the part that actually matters.
What causes the dip
Two things. The lender pulls your credit, which is a hard inquiry worth a few points and gone within a year. And you open a new account, which lowers the average age of your credit history for a while.
Together that is usually a drop of somewhere between five and twenty points, and it recovers.
What causes the lift, and why it is bigger
About 30 percent of your score is credit utilisation, the share of your available credit you are using. Carrying 18,000 on cards with a 20,000 limit puts you at 90 percent, and that is punishing.
Pay those balances to zero through a consolidation and utilisation falls to almost nothing. That single change can move a score 40 to 80 points within two or three months, far outweighing the initial dip.
Payment history is another 35 percent, and one predictable mortgage payment is easier to keep clean than six separate due dates.
The mistake that undoes all of it
Leaving the cards open and using them again. Now you have the mortgage plus fresh balances, utilisation climbs back, and you are worse off than when you started with more debt secured against your house.
I would rather say this plainly than have you find out later. The consolidation is the easy part. Not refilling the cards is the whole game.
Keeping the accounts open with zero balances actually helps your score, because it preserves your available credit and your history length. Open and unused is good. Open and used is the trap.
Timing if you are buying soon
If a home purchase is within six months, tell me before we do anything. The sequence matters, and doing this in the wrong order can cost you an approval.
If you are weighing this up, would it help to look at what it would do to your numbers specifically?
General education, not financial advice. Figures are illustrative and subject to lender approval (O.A.C.). Lora Fenn, Mortgage Agent Level 1, Lic. #M25003153. Dominion Lending Centres YBM Group, FSRA #11129. 705-881-2780 · lfenn@dominionlending.ca
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