Raise Credit Score Before Refinancing For Better Rate

Added March 20, 2009 by Ilyce R. Glink

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Summary: If your home loan has a high interest rate because of a low credit score, you’ll want to take time to raise it before refinancing for a better rate. Raising your credit score can be done my paying all of your bills on time for up to a year. You can stay on top of your credit history by getting your annual free credit report.

Q: I am a first-time homeowner. I just purchased my home and got an awful APR because I had bad credit. My credit score is 581. How soon can I refinance for a better interest rate?

A: When your credit score goes up, you can refinance. But I wouldn't refinance until you know that your credit has improved and your score has gone up.

To raise your credit score, you'll need to pay all of your bills on time for 6 months to a year. I have a lot of credit score information at ThinkGlink.com.

Finally, make sure you check your credit history (it's free, although you'll pay $5 to $7 for a copy of your credit score) at www.annualcreditreport.com.

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