Does refinancing help your credit?

[shondra0609]

In July I financed a 2012 Chrysler minivan with a 19% interest rate.  I only bought the vehicle to help rebuild credit and I knew my interest rate would be high if I got financed at all.  This was with Santander.  I refinanced with Capital One yesterday with a 9% interest rate saving me over $100 a month and over $7000 for the life of the loan.  Woo Hoo.  I'm thrilled with it, but am just wondering if the refinance with help at all with my credit score since I will have a paid in full account, no missed payments, etc.

[pizzadude]

---

@shondra0609 wrote:

In July I financed a 2012 Chrysler minivan with a 19% interest rate.  I only bought the vehicle to help rebuild credit and I knew my interest rate would be high if I got financed at all.  This was with Santander.  I refinanced with Capital One yesterday with a 9% interest rate saving me over $100 a month and over $7000 for the life of the loan.  Woo Hoo.  I'm thrilled with it, but am just wondering if the refinance with help at all with my credit score since I will have a paid in full account, no missed payments, etc.

---

Congrats on dropping your interest rate !  Closing out the old loan and opening a new one should have minimal effect on your FICO scores.

[Plasticard]

Probably the only ding to you credit score will be the hard pull by the lender. However, I'm not sure if auto loans gets calculated into AAoA? Kind of curious myself. Also, for someone getting a mortgage, having the $100 a month less payment would help them with their DTI ratio. 

[StartingOver10]

---

@shondra0609 wrote:

In July I financed a 2012 Chrysler minivan with a 19% interest rate.  I only bought the vehicle to help rebuild credit and I knew my interest rate would be high if I got financed at all.  This was with Santander.  I refinanced with Capital One yesterday with a 9% interest rate saving me over $100 a month and over $7000 for the life of the loan.  Woo Hoo.  I'm thrilled with it, but am just wondering if the refinance with help at all with my credit score since I will have a paid in full account, no missed payments, etc.

---

Congrats Shondra!

You made an excellent financial move. How the refi affects your score in the short term is unknown, but it certainly is a smart step to reduce both the interest rate and the payment of your auto loan.

IMO it can't hurt to have a paid off tradeline too!

[black_citi]

Congrats on the refi! I hope to do the same in March. I'm at 13.7% with Santander. I hope to get down to 7% or less through a CU.

[juggalo9er]

---

@i black_citi wrote:
Congrats on the refi! I hope to do the same in March. I'm at 13.7% with Santander. I hope to get down to 7% or less through a CU.

---

i went from 20.54% down to 4.9% thanks to a credit union after 1 year...it can be done

[mtrsprt]

Just make sure you dump the Chrysler minvan after a couple years.  They depreciate ridiculously fast.  

[kroberts67]

My score dropped 40-something points for having a new acct when I refi-ed.  It didn't matter apparently that I showed a paid off loan.  I'm still not sure why it took such a big hit for that.  It was annoying and it has climbed back up but my payments were lowered at the time, so that's what matters as I'm not in the market for a mortgage etc.  Once my EX hits 750 I'll do it again to get the 1.99/1.49%.  Congrats on your rate, smart move!