Refinancing will hurt your credit rating a bit at first, but it could actually help in the long run. Usually, your score will drop a few points, but you can recover in a few months. Refinancing and loan modifications may temporarily lower your FICO scores in some areas, but they can save you money with a lower monthly payment. The extent to which a rating is affected depends on how it is reported and on the additional information in your credit report.
People tend to refinance loans to get lower interest rates, lower their monthly payments, and sometimes raise money to pay off other debts. Refinancing usually lowers short-term credit ratings slightly, and then they recover. However, in some cases, refinancing can help you increase your credit rating in the long term, especially if your goal in refinancing is to make your personal finances more manageable.
Mortgage refinancingcan affect your FICO credit score in different ways, depending on credit agencies, the financial companies that produce credit scores better known.
Another aspect of refinancing that can affect your credit score is that your previous mortgage will also appear as a closed account on your credit report. In fact, mortgage refinancing can worsen your FICO score, so it's wise to take some precautions. Follow these steps to keep your FICO score in good shape, which, of course, is very useful for refinancing mortgages.