How Credit Scores Affect Refinancing: What You Need to Know

Your credit score is one of the most important factors lenders evaluate when you refinance your mortgage. It impacts whether you’re approved, the rate you’re offered, the fees you’ll pay, and even your break-even point. Two homeowners with the same income and home value can receive refinancing offers that differ by thousands of dollars solely because of credit score-based pricing.

The good news? Mortgage refinancing isn’t just for people with perfect credit. Many borrowers qualify (and save money) with average scores — you just need to understand how lenders price risk and what benchmarks matter most in 2026.

This guide breaks down how credit scores affect refinancing, the score ranges lenders use, how your score influences interest rates and approval, and how you can position yourself for a competitive deal.

Key Takeaways

• Credit scores significantly affect refinance approval, interest rates, and lender fees

• Common credit score thresholds are 620, 680, 700, 740, and 760+

• Higher scores may lower your rate and total cost; lower scores may raise monthly payments and fees

• FHA and VA refinances often allow lower minimum scores than conventional loans

• Even a 20–40 point improvement can save thousands over the life of the loan

💡 Pro Tip: Every lender has different pricing tiers for various credit scores. Comparing your options is the best way to ensure you get a competitive deal for your situation.

Why Credit Scores Matter in Refinancing

Your credit score tells lenders how reliably you’ve managed debt in the past. Mortgage loans involve significant risk for lenders, so your credit score helps determine:

• Whether you qualify to refinance

• What interest rate you may qualify for

• Whether a lender must charge extra fees or points

• What other factors a lender may require for eligibility

💡 Pro Tip: Even small differences in your score can lead to big differences in pricing.

Credit Score Tiers Used for Refinancing

Lenders use score “buckets” when pricing refinances. Every lender has different pricing, but here’s an overview of how they may break it down:

760+ (Excellent)

• Access to competitive refinance rates

• Maximum lender competition

• Lowest costs and fees

740–759 (Very Good)

• Nearly top-tier pricing

• Good lender competition

720–739 (Good)

• Strong approval odds

• Slightly higher pricing adjustments than higher credit score tiers

700–719 (Above Average)

• Favorable pricing

• Some lenders may add small pricing hits

680–699 (Average)

• Still eligible for good rates

• Moderate pricing adjustments

640–679 (Below Average)

• Often pay higher rates

• May still qualify for FHA or VA loans

• Higher chances of needing reserves or letters of explanation

580–639 (Poor but Usable for FHA)

• Harder to qualify with conventional loans

• FHA rate-and-term still possible

• Higher MIP (mortgage insurance premiums)

Below 580

• FHA may be possible with higher equity, depending on lender overlays

• Conventional and VA are usually not available

Credit Score Requirements by Refinance Type

Each refinance program has different score requirements, and lenders can add overlays to these requirements, so outcomes vary by lender:

Conventional Refinance

• Minimum score: 620

• Favorable pricing: 740+

• Requires solid credit for cash-out refi

FHA Refinance

• Minimum score: often 580

• Score flexibility makes FHA a strong option for higher-DTI borrowers

• Cash-out requires 620–640 with most lenders

VA Refinance (IRRRL or Cash-Out)

• No official VA minimum credit score

• Most lenders prefer 620+

Jumbo Refinance

• Minimum: 680–700

• Favorable pricing: 740–760+

• These figures are a general industry overview. Each lender may have different requirements. Check with your lender to determine what they require.

How Credit Scores Affect Your Interest Rate

Lenders price refinance rates based on risk. Higher credit scores often signify lower risk, which may lower your rate and total interest paid.

Here’s a rough comparison for a $400,000 loan:

760+

Lowest pricing

Example: 5.75% rate

720–739

Small adjustment

Example: 5.875%

680–699

Larger adjustment

Example: 6.125%

620–639

Significant adjustment

Example: 6.50%+

• These figures are for illustrative purposes only and are not indicative of market rates. Check with your lender to determine what rates they may offer based on your borrower profile.

How Credit Scores Affect Lender Fees

If your score is below a lender’s pricing tier, they may:

• Charge higher origination fees

• Require discount points to unlock certain rates

• Charge rate lock fees

• Require cash reserves

• Decline certain refinance types (like cash-out or removing PMI)

Example

Two borrowers receive the same interest rate quote — but:

• Borrower A (760 score) pays $2,500 in fees

• Borrower B (670 score) pays $7,000 because of the required points

Same rate. Very different costs.

💡Pro tip: This is why most borrowers leave money on the table; they assume their lender’s pricing is fair without comparing it. Fincast solves this problem. Upload your Loan Estimate and receive competing offers from vetted lenders. No new application or credit pull.

How Credit Scores Affect PMI (Private Mortgage Insurance)

If you're refinancing a conventional loan with an LTV above 80%, your credit score heavily influences your PMI premium.

760+

Lowest PMI cost — sometimes as much as half the rate of lower tiers.

620–670

Much higher PMI pricing — often doubling the monthly cost.

Removing PMI is one of the biggest financial advantages of refinancing, but your credit score determines how affordable PMI is in the meantime.

💡 Pro Tip: Before you accept a refinance offer, review the total fees, PMI impact, and compare multiple offers to confirm your pricing is competitive.

Factors That Impact Your Credit Before Refinancing

Here’s what matters most:

1. Payment History (35%)

Late payments in the last 12–24 months have the biggest impact.

2. Credit Utilization (30%)

This measures the percentage of your credit card balance relative to your credit card limit. For best results, keep your outstanding balance at 10% or less of your total credit line, with a maximum of 30%.

Lower = better.

3. Length of Credit History (15%)

Older accounts help your score because they are more established.

4. Credit Mix (10%)

A variety of credit types: mortgages, credit cards, and installment loans, shows you can balance different types of debt.

5. New Credit Inquiries (10%)

When you apply for new credit, they do a hard credit pull, which can temporarily decrease your score — but mortgage inquiries grouped within 45 days count as one.

How to Improve Your Score Before Refinancing

Even small improvements can significantly lower your rate or fees.

1. Pay Down Credit Card Balances

Lower utilization boosts scores fast — sometimes within 30 days.

2. Avoid Opening New Accounts

Hold off until after you refinance. This includes new credit cards, car purchases, and any personal loans.

3. Check for Errors

Dispute incorrect late payments or balances with the credit bureau. Each of the three bureaus has an online dispute system that allows you to report the issue.

4. Avoid Late Payments

Even one late payment can drop scores by 50–100 points and it can take a while to bounce back from it.

5. Pay Down Installment Loans (Optional)

Not as impactful as credit cards, but it may help your score.

6. Don’t Close Old Accounts

Closing old accounts decreases your “credit age”, which can cause your score to fall.

How Credit Scores Influence Your Break-Even Point

When you refinance, it’s important to understand how long it will take to recoup the costs through the monthly savings. The shorter your break-even point, the more sense it makes to refinance.

Your break-even point is determined by:

• Monthly savings

• Total refinance costs

Lower scores → higher fees → longer break-even timeline.

Higher scores → lower fees → shorter break-even → better long-term savings.

Even small credit improvements (20–40 points) can shave months to years off your break-even period.

Why Credit Score Makes Comparing Lenders Hard

Every lender:

• Uses different pricing models

• Applies credit tier adjustments differently

• Has unique underwriting overlays

• Charges different fees even for the same score

Two lenders evaluating the same borrower can price the refinance thousands of dollars apart.

How Fincast Helps You Get Competitive Credit-Based Pricing

Since lenders price your refinance differently based on your credit score, comparing offers is essential.

Here’s how Fincast gives you leverage:

1. Upload your Loan Estimate

When you apply for a refinance loan with any lender, the lender must issue a Loan Estimate within three business days. Upload that LE to Fincast to start the process. No new application. No credit pull.

2. Fincast analyzes your credit-based pricing

It breaks down:

• Rate

• Fees

• Points

• Credits

• PMI

• APR

3. Anonymous lender competition

Vetted lenders compete to beat your deal — without knowing your identity. They base your pricing solely on the loan details — no bias, no identity.

4. Transparent comparison

If your lender’s pricing is excellent, Fincast confirms it. If not, you see how much you can save instantly.

FAQs: Credit Scores & Refinancing

What’s the minimum credit score to refinance?

Every lender has different criteria, but here’s a general overview:

• Conventional: 620

• FHA: 580 (sometimes lower)

• VA: no official minimum

• Jumbo: 680–700

Does refinancing hurt my credit?

You may see a small temporary dip (5–10 points) from the hard credit pull, but it’s typically recovered in a few months if you make your payments on time.

Can I refinance with bad credit?

Often yes — FHA and VA are more flexible — but costs may be higher, which is why ensuring you have the most competitive deal is imperative.

Do multiple refinance inquiries hurt my score?

Mortgage inquiries within a 45-day window count as one inquiry, so your credit score is only affected a single time.

Will improving my score lower my rate?

It can — each tier improvement often leads to better pricing.

Bottom Line

Your credit score significantly affects your refinance rate, fees, PMI, and total savings. But every lender prices credit risk differently, which makes comparison essential.

Improving your score—even slightly—can significantly reduce your refinance costs. And using Fincast ensures you’re getting credit-based pricing that’s truly competitive.

Action Checklist

☑️ Check your credit score

☑️ Pay down revolving debt

☑️ Avoid opening new accounts

☑️ Get your Loan Estimate

☑️ Upload your LE to Fincast

☑️ Compare lender offers anonymously

☑️ Lock the refinance that maximizes your credit-based savings

👉 Don’t let credit-based pricing cost you thousands. Your credit score already determines your rate, but which lender prices your score fairly is the real question. Differences among lenders can mean thousands of dollars in fees or hundreds of dollars in monthly savings. Upload your Loan Estimate to Fincast so lenders can compete anonymously based on your credit profile to see if you’re getting competitive pricing.

• This content is for educational purposes only and does not constitute a loan offer or credit decision.