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Do I need a good credit score to refinance my house?

Having a good credit score can make refinancing your home mortgage much easier and more affordable. While lenders may approve borrowers with lower credit scores, you’ll get the best terms if your score is at least 720. Here’s what you need to know about credit scores and refinancing.

What credit score do you need to refinance a mortgage?

Most lenders like to see a minimum credit score of 620 to qualify for a refinance. However, to get the very best rates, you’ll need a score of at least 720. Here are typical credit score requirements for refinancing:

  • 620: Minimum score required
  • 680: Good credit
  • 720: Excellent credit
  • 760+: Top tier credit

The higher your score, the lower interest rate lenders will likely offer on your new loan. With a top score of 760 or above, you can qualify for the very lowest rates.

How does your credit score impact mortgage refinancing?

Your credit score directly impacts your mortgage refinance in several key ways:

  • Loan approval: Lenders check your credit to determine if you’re a responsible borrower who will repay the new mortgage. The higher the score, the better your chances of approval.
  • Interest rate: Your credit score is a major factor in determining what refinance rate you’ll pay. Better scores mean lower rates and more savings.
  • Fees: Borrowers with lower credit sometimes pay higher fees to offset the extra lending risk.
  • Loan terms: Weak credit means you may only qualify for less favorable loan terms, like a shorter repayment period.

Boosting your credit score before you refinance can translate into real monetary savings over the life of your new home loan.

How to improve your credit score quickly before refinancing

If your credit score is on the lower side, take steps to improve it in the months leading up to your refinance. Here are some tips:

  • Pay down balances: Lowering credit card and loan balances can quickly help your score.
  • Dispute errors: Identify and challenge any mistakes on your credit reports.
  • Avoid new credit: Don’t open new accounts right before applying to refinance.
  • Pay on time: Prevent late payments, which damage scores.
  • Monitor your credit: Review reports regularly so you can act fast to fix issues.

With diligence and discipline, you may be able to raise your score 50-100 points or more within 6 to 12 months. This can translate into major interest savings when you go to refinance.

Alternatives if you can’t improve your credit enough

Sometimes life circumstances prevent you from significantly raising your credit score before it’s time to refinance. If that describes your situation, don’t panic. You still have options, including:

  • FHA streamline refinance: The FHA program is more lenient on credit, potentially approving scores as low as 580.
  • VA IRRRL: VA loans allow credit scores down to 620 and have flexible guidelines.
  • USDA refinance: For rural properties, this program can approve borrowers with credit scores starting around 640.
  • Subprime lenders: While rates are higher, specialized lenders work with lower credit scores.
  • Get a cosigner: Adding a cosigner with better credit can help you qualify and get better terms.

While these options often come with less ideal rates, they can still allow you to refinance and start saving when you have poor credit.

Should I wait to refinance until my credit is better?

Here are some things to consider when deciding if you should wait to refinance:

Pros of waiting Cons of waiting
– May qualify for lower rate with better credit – Mortgage rates could increase while you wait
– Chance to improve score and get approved more easily – Miss out on savings by not refinancing sooner
– Reduced fees with higher credit score – Home value could decrease, reducing equity

In general, its best to refinance as soon as rates drop enough that you can achieve significant savings. You may lose your chance at an optimal rate environment if you wait too long. However, take some time to boost your credit first if it will only be a few months. Just monitor rates closely so you can act before they rise again.


While it’s possible to refinance with poor credit, maintaining a good credit score of 720 or higher can make the process much smoother. The higher your score, the better loan terms and lower interest rate you can qualify for. Take some time to boost your credit leading up to your refinance application. But don’t wait too long at the expense of missing out on substantial interest savings if rates are already favorable. With flexibility and diligence, you can find a way to refinance your mortgage even with imperfect credit.