Credit score needed to refinance: Rules by loan type

What credit score is needed to refinance?

The minimum credit score to refinance varies by lender and loan type. For example, you need a minimum credit score of 580 to refinance an FHA loan or 620 to refinance a conventional loan. But some lenders might set a higher minimum of, say, 600 for FHA or 640 for conventional.

Keep in mind that the better your credit score is, the lower your new interest rate will be. So while it’s possible to refinance with a credit score as low as 580 or 600, the best rates typically go to homeowners with credit scores of 720 and above.

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Credit score to refinance by loan type

You probably won’t need a high credit score to refinance. But the actual threshold you face will depend on three main things:

1. Your loan type (conforming, government, or jumbo)
2. The type of refinance (cash-out or no-cash-out)
3. Your mortgage lender

Here are the typical credit score minimums for each refinance program. Keep in mind that lenders can set their own requirements and some may require a higher score than what you see below.

Conventional loan refinance credit score requirements

To refinance a conventional conforming loan, you typically need a credit score of 620 or higher. That’s true for both a cash-out or no-cash-out (“rate and term”) refinance.

Conventional refinance FICO score minimums

• Conventional rate-and-term refinance: 620
• Conventional cash-out refinance: 620

If you’re hoping to do a cash-out refinance, you’ll also need plenty of home equity because lenders ask you to leave 20% of your equity in the home after the cash-back amount. You can learn more about how cash-out refinancing works here.

Conventional refinance rates are highly dependent on your credit score. So while you can refinance a conventional loan with a credit score of 620 or higher, you’ll get a better interest rate with a score above 720.

FHA refinance credit score requirements

Technically, you can refinance an FHA loan with a credit score as low as 500. But it’s very difficult to find lenders that allow such low scores. In practice, you typically need a credit score of 580 or higher for an FHA refinance.

FHA cash-out refinancing requires a higher credit score; typically 600-620 or above.

FHA refinance FICO score minimums

• FHA rate-and-term refinance: 580
• FHA cash-out refinance: 600-620

Note that with the FHA Streamline Refinance, lenders are not officially required to check your credit score. But many will do so anyway to make sure you’re in good financial standing.

VA refinance credit score requirements

The Department of Veterans Affairs does not set a minimum credit score for the VA loan program. But many lenders set their own minimum of 580-620 to qualify for a VA loan refinance.

The VA cash-out refinance is more variable. It may be possible to qualify with a score of 580-620, but some lenders require credit scores up to 680 or higher for a VA cash-out refi.

VA refinance FICO score minimums

• VA rate-and-term refinance: 580-620
• VA cash-out refinance: 580-680

Note that with the VA Streamline Refinance (VA IRRRL), lenders are not officially required to check your credit score. But many will do so anyway to make sure you’re in good financial standing.

USDA refinance credit score requirements

The USDA loan program offers only rate-and-term refinancing; no cash-out is allowed. You’ll typically need a credit score of 620-640 for a USDA refinance.

USDA refinance FICO score minimums

• USDA rate-and-term refinance: 620-640

Like the FHA and VA loan programs, the USDA offers a Streamlined Refinancing option that reduces the financial checks and documentation required to refi.

Jumbo loan refinance credit score requirements

Jumbo loans are not regulated by any central agency. That means mortgage lenders get to set their own jumbo loan requirements. For a jumbo loan refinance, you can typically expect to need a credit score above 700, perhaps 720 or even 740.

Jumbo loan refinance FICO score minimums

• Jumbo rate-and-term refinance: 700-740
• Jumbo cash-out refinance: 700-740

Remember that these minimums vary by lender. So shop around for a mortgage company that can help you qualify for a low rate based on your credit score.

How does credit score affect refinance rates?

Your credit score doesn’t just impact your refinance approval. It also affects the interest rate lenders will offer you. Everything else being equal, a high score should earn you a lower rate while a bad credit score means you’ll pay more for your refinance loan.

You can use FICO’s loan savings tool to give you a rough idea of just how much your credit score affects your mortgage rate and monthly payment. In turn, this will have a big impact on your total interest cost over the life of the loan.

We show one example below using a 30-year, fixed-rate mortgage with a $400,000 loan amount.

*Annual percentage rates reflect the nationwide average according to FICO.com on April 26, 2022. Interest rates change daily and rates shown here do not reflect the rate you will be offered.

Is it possible to refinance with bad credit?

Yes, many people refinance with bad credit. It’s typically easiest to refinance with bad credit if you are not taking cash-out, and if you plan to use a government-backed loan program. The FHA, VA, and USDA loans all have lenient credit scores to refinance.

If your existing mortgage is an FHA, VA, or USDA loan, things are even easier. That’s because you can use a Streamline Refinance. With this low-doc program, lenders are technically not required to check your credit score or credit history at all (although many do anyways).

Regardless of current loan type, anyone can refinance into an FHA loan. Because this program requires only a 580 FICO score to qualify, it’s the most common option to refinance with bad credit.

Just note that FHA loans have downsides, most notably ongoing mortgage insurance premiums (MIP). These can typically be removed only by refinancing into a conventional loan, for which you’ll need a credit score of 620 or higher.

Raise your credit score to save more on your refinance

If you have a lower credit score, it might be difficult to refinance. Even if you qualify, bad credit typically leads to higher rates, which often means refinancing isn’t worth it financially.

But raising your credit score even a few points before you refinance can be a big help.

That’s because most lenders use credit score “bands” or “tiers” when determining the refinance rate you’ll be offered. For example, a “good credit score” can be anywhere between 700 and 720. So you don’t need to get all the way up to 720 for a better rate; you just need to get above 700.

If your credit score is currently just under 700 (or at the top of another credit tier), you might be able to drop your rate and earn significant savings by raising it just a few points.

Tips to improve your credit score before refinancing

Perhaps the fastest way to improve your credit score is by keeping your credit balances below 30 percent. Check all your credit card and store card balances, pay them down below 30% if you can, and be sure you keep them there. This lowers your “credit utilization ratio,” which has a huge impact on your credit score.

Other tips to raise your FICO score include:

1. Order a free copy of your credit reports from AnnualCreditReport.com, check for errors, and get them fixed if any are present
2. Keep paying all your bills and debt payments on time
3. Don’t open or close credit accounts or finance any large purchases in the months before your refinance
4. Ask your mortgage lender to run a “rapid rescore,” which can tell you how to improve your score

Because scoring models vary by credit bureau, it can be smart to have your lender help you as you try to raise your score. Mortgage lenders usually have simulators and tools that work within each bureau’s parameters and can tell you exactly what to do to raise your scores.

For more details on these, along with other tips, read: How to raise your mortgage FICO score fast.

Even if you don’t have the optimum credit score to refinance now, you might have one soon.