Don't Let A Refi Hurt Your Credit Score

MoneyTips

By Tracy Scott

Do you have a loan payment that is squeezing your monthly budget a bit tighter than you’d planned? When you borrowed the money five years ago, you may have been in a different job, childless or paying less on other household expenses. Refinancing may provide the needed relief for your financial situation. It may also prevent you from needing to make bad money choices such as maxing out your credit card for groceries or opening new lines of credit to pay your bills.

What Does Refinancing Mean?

Refinancing is paying off a current loan by originating a new one. The old debt still exists, but it is now in the form of a new loan, quite often with a lower payment and interest rate. You need good credit to qualify for a refinance. Just as when you applied for the original loan, approval is often based on your ability to repay the loan, your employment history, and your current credit score.

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