How Does Mortgage Refinancing Impact My Credit Score?

How Does Mortgage Refinancing Impact My Credit Score? Your credit score may be temporarily impacted by refinancing your mortgage because the lender will run a hard inquiry on your credit report when you apply for a refinance. A hard inquiry, which is a request for your credit report, can result in a few points being deducted from your credit score. Nevertheless, this effect is typically transient, and your credit score will probably rise again in due course.

  1. Depending on how you manage the new loan, refinancing your mortgage may also have a longer-term effect on your credit score.
  2. Over time, maintaining low credit utilization and making timely payments on the new loan can improve your credit score.
  3. On the other hand, your credit score may suffer if you overuse your credit cards or miss payments.
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When choosing whether or not to refinance, it’s critical to take your credit score into account. Before submitting an application for refinancing, you can obtain a free copy of your credit report and check your credit score to see where you stand.