How Does My Credit Score Affect Refinancing?

First, your credit score will determine whether you can even get approval on a new mortgage loan, and in particular on a new loan with better terms than your existing loan. The higher your credit score, the lower your new interest rate will be.

On the other hand, if your credit score is lower than when you took out your initial mortgage loan, refinancing may not save you any money, and could even cost you more money than your current mortgage, over the long term.

A typically good credit score is over 620, or even higher for some lenders. The higher your credit score, the less expensive it will be to refinance.

Some government-backed programs, which are designed to help protect lenders from defaulting borrowers, will allow borrowers with lower credit scores to find loans more easily. These government-backed loans have lower required minimum credit scores, or may have no minimum credit score requirement at all. However, there may be other limitations and qualifications for these loans.