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How Does Refinancing Hurts Your Credit Score?

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Refinancing can have various impact on your credit score. You have not only understand how refinancing works but realize the main difference in the way it is reported to the three credit bureaus. It can be determined as an old loan with modifications. Or it is shown as a completely new loan.

In the first case when a loan is reported with changes, your score can be influenced by the information about the changes in the loan agreement.

It is the information about the new terms of the loan, possible changes to its’ balance, and the credit inquiry. Overall, you should not worry, as the impact on your score is minimal.

When the loan is reported as a new one, you get an extra impact along with the changes to the terms, balance and the inquiry. With the new loan you get a new “open date”, which indicates you have a new loan obligation.

This might have more significant impact on your credit score in comparison to the situation when you only change the terms of the loan.

Check also: Is Refinancing Your Home Possible With Bad Credit?