Refinancing And Your Credit Score
Rates may seem to be low now and you might think that it is already the most desirable time to be able to refinance your mortgage. However, there are other things which should also be given careful consideration.
In the short run, refinancing can result in negative consequences which can badly hurt your credit score.
However, it may be worth the risk if you are aware that doing so would allow you to keep an extra hundred dollars every month.
If the refinancing has been reported to the same lender of your loan, you should expect that this can be hurtful to your credit score. The credit inquiry itself can already cause your credit rating to become lower leading into an unfavorable credit score.
Any reported changes regarding the terms of your loan will prove to be damaging to your credit score.
The negative impact can prove to be bigger provided that the changes made will be reported as a new loan. This is basically because most credit companies will assume that the person who takes out the loan has just given way for a new financial obligation on an open date. Because the person owes more money to the company, that same person is assumed to be riskier.