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giammarcor

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Refinancing a defaulted loan versus effects of inquiries and new account?
I've worked to restore my credit for the past 7 years. It has gone up from 598 to 713 (currently) in that time. I have one old student loan that i am paying off that is technically in default although I have made on-time payments for the past 7 years. My question is, would refinancing that with a personal loan and taking it out of default be better for my credit score? I know my score will be impacted by the new account and inquiry but will it ultimately be better to do that than to simply pay on the defaulted loan?

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In most cases, yes.

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Every situation is different, but your credit score is a balance of good details vs negative details.  So any time you take a small negative in your score to improve the larger negative you actually gain a positive with the difference that just improves more over time if you meet your obligations as agreed.  However, if your current loans are reporting current payments, then you are likely already better off paying the interest of the current loan.

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