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How does a refi affect your scores?

Valued Contributor

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?

 

 

Cap 1 - $23,000 / Lowe’s - $17,000 / Barclay Rewards - $16,400. / Capital 1 - $15,000 / Walmart - $15,000
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EQ - 740 / TU - 748 / EX - 748
3 REPLIES
Moderator Emeritus

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

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! Smiley Happy)

 

Hope yours goes well today!

Valued Contributor

Re: How does a refi affect your scores?


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. 

EX = 849 EQ = 850 TU = 850 as of 07/2017
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