Refinancing may lower your credit score by some points, but the impact on your credit rating will only be temporary. Applying for a loan creates a difficult enquiry. Refinancing may be worth it if rates have fallen since you applied for your loan. Refinancing a car could negatively affect your credit. If you're considering applying for a mortgage or that truly exclusive credit card you had in mind, you might want to postpone refinancing an auto loan to keep your scores as high as possible and maintain your chances of being approved.
Refinancing your auto loan can affect your credit score both positively and negatively, depending on your financial situation. Credit inquiries are likely to lower your credit score, for example, but your ability to pay for your car on time thanks to refinancing can improve it. Because refinancing tends to make it easier to repay the loan more quickly by reducing monthly payments, credit utilization may decrease later of refinancing. Because of this, if you're planning to apply for a mortgage or other major loan soon, it might be worth putting off refinancing your car.
