Does Refinancing a Mortgage Hurt Your Credit Score?
Refinancing can save you thousands, but homeowners worry about the credit hit. Here's the real, usually minor, impact.
General information, not professional advice — see terms of use.
Refinancing a mortgage causes a small, temporary dip in your credit score, but the impact is usually minor and short-lived.
The two ways refinancing affects your credit:
1. Hard inquiry: When you apply, lenders check your credit, creating a hard inquiry that typically lowers your score by 2–5 points. Good news: if you shop multiple lenders within a 14–45 day window, the credit bureaus count all the mortgage inquiries as a single inquiry, so you can compare rates without extra damage.
2. New account / closed account: Refinancing replaces your old mortgage with a new one. The old account is closed and a new one opens, which lowers the average age of your accounts and can cause a temporary dip.
How much and how long:
- Most people see a drop of a few to around 15 points
- Scores typically recover within a few months of on-time payments on the new loan
Why it's usually worth it anyway:
- If refinancing lowers your interest rate meaningfully or shortens your loan term, the long-term savings vastly outweigh a temporary credit dip
- A lower monthly payment can actually improve your overall financial stability
Tip: Avoid opening other new credit accounts (cars, cards) around the same time as a refinance, since multiple new accounts compound the temporary effect. And always make your payments on time during and after the process.
Follow-up questions
How many points does refinancing drop your credit score?
Typically a few to around 15 points, from the hard inquiry and the opening of a new account that lowers your average account age. The dip is usually temporary, with scores recovering within a few months of on-time payments on the new loan.
Does shopping for mortgage rates hurt your credit?
Not significantly if you do it within a short window. Credit scoring models treat multiple mortgage inquiries within a 14–45 day period as a single inquiry, so you can compare rates from several lenders with minimal credit impact. Spreading applications over months, however, creates multiple separate inquiries.
How long does it take for credit to recover after refinancing?
Most people see their score recover within a few months, as long as they make on-time payments on the new loan and avoid opening other new accounts. The hard inquiry's effect fades after about a year, and the new account ages over time, restoring your average account age.
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