Credit Rating & Refinancing question

[bertusgeert 1]

Quick question, if anyone knows:

I have excellent credit, albeit shallow. (A couple of credit cards through college years, never missed a payment, never carried a balance). Just financed my first car, at 8.5% (being the lowest rate available) in November. Of course, as banks check credit scores, I am beginning to get offers to refinance for 7%.

Are these just offers to pull me in, before they check my true credit and tell me 7.9% I don't want my credit checked for nothing.

And...does refinancing hurt your score in any way? How long should I wait to refinance, and how often can I do so?

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As jy dom is moet jy bloei!

[rwieder 0]

You don't mention your age, that has a lot to do with obtaining credit. Checking your credit, or having your credit run too many times can also hurt your credit rating. I would say, if it's a bank you've done business with for a long time, then yeah go for it. Make sure you get a "fixed" rate. On the other hand if it's some fly by night financing agency, don't do it. A lot of times, more often than not after you make a big purchase, next thing you know credit companies are coming out of the wood work offering you credit. Avoid it like the plague!

Good Luck, Take Care.

-Richard-
"You're Holding The Rope And I'm Taking The Fall"

[DougH 270]

Age, or age of credit?

Most of the stuff people say or think they know about their Fico score is wrong. New credit may hurt you in the short term because it dilutes the average age of your accounts, but it helps in the long run to have more accounts with low balances.

It is all about your utilization percentage.

If it is between lowering your interest, or saving your credit score a few points then go with the lower rate, that is more important.

Check out www.myfico.com... good free forum that is a great resource.

"The restraining order says you're only allowed to touch me in freefall"
=P

[bluepill 0]

They may be offers to pull you in; you need to check before they execute a credit check.

I am not sure how it works in the US but in the UK, if the frequency of requests for credit scoring goes up then you credit rating gets worse. This sounds daft because it kind of means that you can’t shop around. But from a financial company perspective, they would just view it as someone continually trying to obtain credit. If you want to shop around, make sure you do so without anyone executing a credit score.

Does it hurt to refinance? – No not at all. In fact most companies would view this as prudent measure in managing your finances, providing you don’t do it too often.

Words of warning though… Make sure you check the small print on:

The refinance deal
Often the refinance package may have “additional” admin charges for the privilege of the refinance.

The loans and cards you are paying off
There could be an exit fee or early redemption fee. I know of some banks here in the UK that will charge you 3 months worth of payments as an early redemption penalty. They just hide it in the settlement amount.

Do you have Independent Financial Advisors? If you do it may be worth having a full review with one. They can not only advise you of the better loan deals but they can also review all of your outgoings and point out where you could improve, particularly if you have any investments.

BP

[tigra 0]

Refinancing your car? Assuming you bought the car new, you really won't have that many opportunities to do it it the "new car" rate. Paying off a car loan in short period of time (even if it is through a refinance) will actually improve your credit score more than a few inquiries will hurt it.