--- title: How Does Refinancing Really Affect Your Credit? description: Have you checked to see how refinancing affects your credit score? Learn how working with a refinance and mortgage lender can simplify the process. image: https://www.usmortgages.com/hubfs/image-23.png --- # How Does Refinancing Really Affect Your Credit? by [US Mortgages](https://www.usmortgages.com/home-talk/author/us-mortgages) / December 13, 2018 ![Refinancing with a mortgage lender in Denver](https://www.usmortgages.com/hubfs/image-23.png) While refinancing a mortgage can save money, most people may not have considered how it'll affect their credit and the impact it may have on their lives. For example, did you know that a [lower credit score](https://www.investopedia.com/articles/personal-finance/081514/what-do-credit-score-ranges-mean.asp) can cause your credit card rates to increase, impact your eligibility for a line of credit, and increase your insurance premium? Here's how refinancing can affect your credit and what you can do to minimize its effect: The Impact on Your Credit Score Your credit score will likely take a **minor hit** in the short-term when you refinance your mortgage. During the loan application process, the lender will check your credit score and credit report. This hard inquiry will cause your credit score to dip temporarily and stay on your credit report for two years. However, it'll only impact your credit **during the first year** under most [credit scoring models](https://www.debt.org/credit/report/scoring-models/). During the refinancing process, you're essentially replacing an old loan account that has a longer credit history with a brand new account. Since a longer credit history often helps improve the credit score, closing the old account can impact your credit. However, some scoring models consider the payment history of closed accounts, which helps reduce the impact of refinancing on your credit score. In addition, how a loan is reported can also impact your credit score. For example, if the loan is considered as a modification to an existing loan instead of one with a new open date, it'll have a smaller impact on your credit. ![Refinancing with a Denver mortgage lender](https://www.usmortgages.com/hs-fs/hubfs/image-24.png?width=405&name=image-24.png)  How To Minimize the Impact Of Refinancing On Your Credit Score In most cases, the money you save through refinancing a mortgage outweighs the temporary hit on your credit score. In addition, by making it easier to pay off the loan, your credit score will improve thanks to a **stronger payment history**. By taking a few precautions, you can minimize the impact of refinancing a mortgage on your credit: - **Do your rate shopping within a short window of time** so all the loan inquiries will be treated as a single inquiry. This time frame can range between 14 to 45 days, depending on the scoring model. Thoroughly research the [best mortgage refinance companies](https://www.usmortgages.com/refinance-application) to help you get the best rates. - **Stay on top of your old loan payment** during the refinancing process and work with your loan officer to make sure that the transition payment is made on time so it won't be marked as a late payment. - **Do precise calculations** to ensure that refinancing is indeed a good idea for your situation. It may take you longer to pay off the newly refinanced loan and the payment at the beginning will be mostly interest. That means refinancing may increase your [interest cost](http://www.interest.com/refinance/news/is-now-the-right-time-to-refinance/) and you may not save as much as you anticipated. To find the best refinancing option for you and to minimize its impact on your credit score, work with a refinancing company that has the right expert knowledge to help you navigate the process. If you're looking to refinance your mortgage, **US Mortgages** can provide you with the expert advice and mortgage refinancing services you need to make the process much faster and easier. Contact us today to see how we can help. 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