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is already in good standing. There are a couple of reasons why your score may drop. One is that lenders take what's called a "hard inquiry," or a detailed look, at your credit score. Such hard inquiries can cause your score to drop by a few points. The second is that the fact of refinancing itself can reduce your credit score. The third is a possible increase in your utilization ratio, which is calculated by comparing the amount you owe versus your total credit limit.
Start the refinancing process on the right foot
There's a lot involved in the refinancing process. But when you know where your credit score is at before you begin, it can help you create a better plan for action. With VantageScore's latest scoring model, you can get an accurate and detailed picture of your credit scores so you can make the best refinancing decision for you.
checks or score benchmarks. A lot of people also choose to get home loans through Fannie Mae and Freddie Mac, two of the largest home loan lenders in the country. Both typically require a minimum credit score of 620 to get approved.
Good credit isn't the only thing you need to qualify
When you're looking to refinance, having an excellent credit score can be beneficial. However, your score doesn't automatically make you eligible. Lenders will look at a number of other things before they approve refinancing, such as your:
* Debt-to-income ratio (DTI): The amount of debt you have compared to how much money you make.
* Loan-to-value ratio (LTV): Allows lenders to assess the lending risk before approving a mortgage or a mortgage refinance. Loans that have a higher LTV are typically considered to be a higher risk.
If your lender says you have a high LTV ratio, that doesn't automatically disqualify you. There are government-sponsored programs from Fannie Mae and Freddie Mac that are available for borrowers who have LTV ratios that are 97.01% or higher.
Refinancing can drop your score temporarily
Like any changes to your installment accounts, refinancing your mortgage can lower your score. However, you don't need to worry about this as much if your credit
"However, you don't need to worry about this as much if your credit is already in good standing."