Question by chicken2008: Do you think it make sense to refinance your mortgage if you are trying to increase your credit score?
I am trying to get my credit score into the high 700’s within the next few years right now it is in the low 600’s. It was suggested to me to refinance my mortgage. I thought that will drop my score some points. Also I am fine with my monthly payment. I attended a financial fair and this was suggested to me by a advisor.
I know applying for a new line of credit wont increase my score. I was basically asking will it and can it drop my score.
Answer by dustoff
A refi will not “increase your credit score.”
What do you think? Answer below!
I agree, a refinance will not increase your credit score. As a matter of fact, with scores in the low 600’s you probably would have some difficulty and might even pay a higher interest rate. If you are ok with the payment right now, leave well enough alone.
Refinancing can be very expensive, even with no points. You still pay for appraisals, attorneys, etc.
The things that increase your credit score is paying every bill on time every time. Keeping balances to limits very low. Not applying for a lot of new credit, etc. Sometimes it just takes a little time!
It will only potentially drop your score if you take on an increased loan amount, thus jumping your overall debt to income ratio..
I just closed on my refinance. Went from a 30 year fixed to a 15 year fixed. I’m now paying roughly $ 190 more each month, but will pay of my mortgage in half the time. I’m saving over $ 200,000 in interest cost!
Just be sure to do your homework on rates and programs, especially if you have special circumstances such as poor credit or income challenges.