Refinancing Based on Your Credit Score
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Does my credit score affect refinance rates?
One of the most often overlooked times to compare mortgage refinance rates and refinance your home loan is when your credit score improves. Your credit score varies slightly from month to month, but that doesn't mean you should begin to compare mortgage refinance rates every time you see a small improvement. Instead, begin to compare mortgage refinance rates if...
- You make major changes to your credit by paying off credit cards, reducing loan balances, or clearing up late balances.
- Your credit score increases, putting you into the next bracket up in terms of loan rates.
- Refinance rates are on a downward trend--you could find that you enjoy a substantial savings in your overall interest rate after you refinance.
Remember, your credit score is an indication of your trustworthiness and responsibility in bill paying, and banks use that number as a means of determining how much risk you pose to them and, as a result, how much to charge you in interest. If your credit rating was not as high as you would have liked when you first purchased your home, you can always work to improve it and refinance later.