Reply
Established Contributor
masscredit
Posts: 691
Registered: ‎07-17-2012
0

How does a refi affect your scores?

I'm going to be refinancing my car today and am wondering how that will affect my credit scores. I figure on one hand it will show the loan being paid off which can boost it a few points but on the other hand, it will show a new loan so it will go down a few points.  So I guess it can be a wash in the end?

 

 


|****$6000****|****$6000*****|****$4500*****|****$2500****|****$1600****|****$3000****|******$750******|*****$700*****|
EX - 651 (MyFico 06/05/14) TU - 662 (Barclay 08/05/14 ) EQ 04 - 699 (DCU -07/26/14) EQ 08 - 686 (MyFico -08/09/14)
Moderator Emeritus
llecs
Posts: 32,880
Registered: ‎08-04-2007
0

Re: How does a refi affect your scores?

I vote for a net loss, but only temporary.

 

Having it shown as a payoff may or may not help your FICO. FICO likes to see $0 balances on a majority of reported TLs so if the loan reports zero and aids in that then possibly a few points there. For the loan itself, going to $0 really won't do anything since installment util is a tiny part of FICO scoring. 

 

The new loan (the refi) would report and that would ding you for the new credit, w/ a possibility for an additional ding for AAoA change, if any at all. But that would wear off and I bet inside a year you'll be back to par.

Frequent Contributor
pt310
Posts: 380
Registered: ‎05-03-2013
0

Re: How does a refi affect your scores?

I just did a re-fi on my auto loan last week.

 

Original & re-fi were both at my CU. They didn't change my account number or anything, so won't affect my AAoA. Only a HP inquiry added to my CR. (That and a 2.5% drop on my interest rate! :smileyhappy:)

 

Hope yours goes well today!



In the Garden since 7/3/13
Latest Scores: 749 EQ MyFico 8/5/13 | 766 TU Wally Aug '13 | 732 CK Fako 8/7/13 | 776 CS Fako 8/6/13
Goal: 780+ and my own house by next summer!
Valued Contributor
thom02099
Posts: 1,323
Registered: ‎08-30-2011
0

Re: How does a refi affect your scores?

[ Edited ]

masscredit wrote:

I'm going to be refinancing my car today and am wondering how that will affect my credit scores. I figure on one hand it will show the loan being paid off which can boost it a few points but on the other hand, it will show a new loan so it will go down a few points.  So I guess it can be a wash in the end?

 

 


Just completed a refi on one of my vehicles and saw absolutely no change in scoring.  My refi was for the same length of remaining months, simply getting a lower interest rate and lower payments.  May have an impact in a month or so, but doubtful.  I've done refi's in the past for the same reason that also had no impact on scoring.  The old loan does show up as paid but immediately there is a new loan, depending of course on how quick your lender is to report both transactions.  Mine reports both immediately. 

 

EDIT:  Also, installment loans usually have less of an impact on scoring than credit cards, unless one has more than 4 installment loans, not counting mortgages. 

AMEX Gold NPSL / AMEX Zync NPSL / AMEX Blue Cash Preferred $14K / Bank of America Cash Rewards Signature Visa $15K / Merrill Lynch Plus Signature Visa $15K / Wells Fargo Propel 365 $15K / Chase Sapphire Preferred Signature Visa $10K / J P Morgan Select Signature Visa $10K / Chase Slate Visa $6K / CITI Diamond Preferred MasterCard $13.2K / Discover IT $10.5K / IberiaBank Select Visa $8K / 1st Command Bank Platinum Visa $7.5K // Home Depot $9.7K / Lowes $10K

EX = 768 EQ = 828 TU = 834 - June/2014

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+