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Credit Do's & Don'ts Before a Refinance

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Published: Thursday, August 19, 2010

Credit Do's & Don'ts Before a Refinance

The strength of your credit score makes a big difference in determining what rate you get when applying for a home mortgage refinance. Here are some do's and don'ts for the four to six weeks before refinancing:

Do- Check your free credit report for errors. Almost 75% to 80% of all reports have errors in them, so make sure to check that all names, surnames, and addresses are correct.

Don't- Open any new lines of credit. If you plan to refinance soon, reject the temptation to open any type of credit card account. Every time you open a new account, your credit score takes a hit.

Do- Pay down high balances. Paying off some debt can help burnish your credit credentials, but do not close out your credit lines. Try to keep four to five credit lines open.

Don't- Pay anyone to fix your credit. Nonprofit agencies can help you pay down debts, but they won't "fix" a history of nonpayment and delinquency. Beware of any business that claims it will repair your credit fast.

Your decisions in the weeks before refinancing can have a crucial effect on your credit score. Get busy and you can make a significant difference in your credit score in the 30 to 45 days before you refinance.

Bella Esshaki