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.
- Depending on how you manage the new loan, refinancing your mortgage may also have a longer-term effect on your credit score.
- Over time, maintaining low credit utilization and making timely payments on the new loan can improve your credit score.
- 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.