Bad Credit Resource Center

Loans probably affect your credit score more than any other item on your credit report.  The types of loans you have, how long you’ve had loans, the amounts you owe and your payment history on your loans are big factors that impact your credit score. You can boost your credit score if you can control your loans.  The next few posts will give you a few tips that can get you well on your way to painlessly managing your loans:

Refinance loans - If you have a high interest rate loan, especially a major loan such as a car or home loan, or if your credit rating has improved since you got your loan, you may want to consider a refinance.  Refinancing means that you take your loan to another lender in order to receive better terms or rates.

However, you don’t want to do this too often. Frequent refinancing prevents you from developing long-term relationships with lenders and results in inquiries on your credit report. In the short run, refinancing can have a negative effect your credit score. This is the result of mulitple inquiries on your credit report as you look for a new lender and as you close old accounts and open new accounts. 

In the long run, though, refinancing can be a good way of boosting your credit score as you free up funds to pay for other bills.  If you’re now missing or delaying payments because you can’t afford some of your monthly bills, then refinancing a loan or two can be a good way to get back on track.

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