Refinancing replaces an existing loan with a new one, usually to get a better rate or different term. That process touches a few of the same factors that affect your score whenever you open new credit, which is why people often see a small, temporary dip right after.

The short-term effects

  • A hard inquiry from the application, causing a small, brief score dip
  • A lower average account age, since the new loan resets that account's history
  • The old loan showing as closed, which can slightly affect your credit mix

The longer-term effects

Once the new loan is open and you're making on-time payments, those effects tend to fade. If the refinance lowers your monthly payment or interest cost enough to make payments more manageable, that can support your score over time through a longer run of consistent, on-time payment history.

Rate shopping within a short window usually counts as one inquiry

If you're comparing refinance offers from multiple lenders, most scoring models treat inquiries for the same type of loan made within a short window (typically 14-45 days) as a single inquiry, rather than penalizing you for each one separately.

When refinancing is worth the temporary dip

If the new terms meaningfully lower your interest cost or monthly payment, the small, short-lived score impact is rarely a reason to avoid refinancing. The bigger question is usually whether the new loan's total cost, including any fees, actually beats sticking with the original loan.