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Posted in Auto Loans
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djwtlw

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Will refinancing my auto loan for a lower interest rate hurt my credit score?

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First, you need to ask yourself, would "I" still do it even if it drop my scores 30 points? Only you can answer it as everyone have different circumstances and priorities, however, If it's a NO? then may I ask what's the point to build and maintaining solid scores if you don't ever use it to benefit me?. Of course it wouldn't be beneficial to someone if they are planning on apply for mortgage in next 8~12 months but you aren't planning on apply for credit anytime soon? Then I don't see why score drop should factors into the decisions. It's not like your scores would be damaged forever and cannot ever recover, but you certainly won't get back the extra interest you paid.

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Second, yes it will, because you close out one loan which the score usually will drops from that, and then you added a new loan, new loan will drop your scores further  because the inquiry(s), lowering your average age of account, taking on more debt, tho yes, technically it's the same amount as before but credit scores would see it differently, and the high(er) loan utilizations.

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