Does refinancing hurt my credit score?
Refinancing can impact your credit score, but don't panic! There are a couple of ways refinancing can affect your credit score, but there are a few things you can do to minimise the impact.
Firstly, when you start the refinancing process lenders will often make a 'hard enquiry' into the state of your credit, meaning they request access to your credit report. If you have too many hard enquiries in a certain period of time your score could dip as lenders may think you are struggling to get credit. To avoid this, make sure that you meet the lender's conditions before proceeding with a hard enquiry.
Another reason your credit score could dip when refinancing is that when you refinance you are essentially resetting your loan, and its history. If you continue to pay off your new loan regularly and on time, this dip should correct itself.
While refinancing shouldn't normally have a big impact on your credit score, if you do have concerns you may be able to chat to your lender or a financial advisor to see if refinancing is right for you.