Does auto refinancing help or hurt your score when lowering rate and number of payments?

[Anonymous]

I asked this in another post but I thought it would be better to create my own so my question doesn't get lost.

I was wondering how this might affect my credit score if any of you might know because I'm trying to raise my score to get a better apartment or maybe even a house at some point.

So anyway I had a $13000 loan with 24% interest and 48 months to go at $324 a month and I thought it was time to try and do better. The best I could do was from capital one at 11% for 36 months paying $350 a month it's $26 a month more but saves me $2500 and 12 months. Was this a good move and will it improve my score?

[marty56]

Great move money wise.  I don't think it will improve your FICO score and you most likely would get a hit but the benefit outways the FICO points.  As long as you aren't tryiing for a mortgage in less then 6 months to a year. 

[Anonymous]

You'll likely take a small hit because of the new account affecting your average age of accounts, but like the other answer this is a great deal. The hit will melt away faster than you might expect.

[pizzadude]

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@Anonymous wrote:

You'll likely take a small hit because of the new account affecting your average age of accounts, but like the other answer this is a great deal. The hit will melt away faster than you might expect.

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+1. Paying off the loan won't make much of a difference to your FICO score. With the new loan you'll incur a small FICO ding for inquiries and reduced AAoA but I think it is a great move to get out from under that 24% interest rate. Also you'll be saving thousands of dollars so that's really what matters IMO.

[Anonymous]

Thanks guys

I knew I wanted to do it for the savings and the faster pay off but was hoping by paying off the loan (I have been paying for 2 years already) I might get a couple of positive points but oh well I'll just have to keep up the payments and try and find another way to get the extra points.

Have a good one and thanks again