While a new refi doesn't represent new debt, it is new credit.
In addition, refi sometimes represents new debt, with cash out or rolling other debt into the refi, thus leaving potential to run up new unsecured debt.
There is also the factor that a refi is based upon current financial circumstances, income, etc. While this doesn't make a difference on the CR, it does represent POSSIBLE risk because sometimes refi is done to restructure debt due to a need to reduce costs related to financial distress.
Sometimes a refi is an effort to compensate for income reductions, etc.
FICO really just uses the law of large numbers. This takes all credit reports and then compares and correlates trends related to which items of credit are most associated to which other factors.
The unfortunate side of trends (averages) is that it won't be an exact fit for all circumstances, yet we all get put into one of these buckets.
The fact remains that a refi MIGHT be a sign of financial need. All new credit (the need to borrow money) can represent some potential risk.
FICO is a bit like genetics and medical predispositions. There are things you can do to "reduce your risk" for certain diseases. But nothing eliminates the risk. In fact, most of the risk factors that we are told to avoid are those things known to be "associated with" and not necessarily a cause in and of itself.
My point is this. Where there is smoke there may be fire. That is what FICO looks at. It is not individualized, it cannot be. The law of large numbers requires that it not look at individuals, but at the masses. The law of large numbers can only be accurate if it ignores the individual case and looks only at the "big picture."
