Short on paying off the old loan with a refinance will have a severe impact on your credit score. But if you are current, why would you be thinking about shorting the loan?
Credit scores fluctuate over time for a variety of reasons. The best scores are obtained when you pay like clockwork on debts, never late, never missing. On revolving credit lines, try to keep your balances below about 30% for optimum effect. Lines with high balances near the credit limit tend to draw down your rating.
Too many lines will drawn down your rating, too, but never close out lines that have a long history of proper payment. If you have more than a dozen lines, you might consider dropping some of the newer ones. The optimum number of lines seems to be between 4 and 8, 2 minimum.
Mortgage debt, on the other hand, is more strictly about on time payment than current credit versus high credit or maximum credit. Secured debt, similarly, is about paying on time.
When all debt payments are added together, the ratio of payments to income should be comfortable for you to make each month, and a new mortgage lender will check that in addtion to your credit score. The capacity to pay off debts combined with a history of willingness to pay on time will get you the best ratings.
Perhaps you could clarify what you mean by short and what you are considering doing?
Best of Luck;
CEO & SR Credit Repair Specialist at
Everlasting Credit Repair
Ex-Mortgage Broker of 10+ years
We also have DIY Packages available.
Beware of anyone offering to "repair" your credit! The Federal Trade Commission issued a stern warning last year that such offers are scams. Find more from the FTC HERE. http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm
The best way to buy a home is to have a decent credit history combined with sufficient Income and Assets for a home purchase.
The best way to have a decent credit history is to settle negative outstanding obligations and pay all your bills on time for at least two years.
Are you foreseeing problems with your payment? You may want to look into a mortgage modification to ammend the terms of your note. In this case, you may have to miss a payment and that hurts your credit score.
I do not understand a short refinance, Bruce says it is refinancing less than you owe. Where in Texas do you do that?
Any thing you do that is not on the up and up will impact your credit and some things that are. Do not try to out think the bankers.
If you are current on your payments and have good credit why would you want to try something funny?
Please explain further.
Are you speaking of a "short sale" or a "Pre-foreclosure"? If so the biggest cause of credit issues is the late pays until you short sale. A pre-foreclosure is many times going to be the best method to salvage your credit. The biggest drop in credit we have seen to date is 155 points doing a short sale. If this is not what your discussing. Please forgive.
Experian (one of the three / Experian, Trans-Union, Equifax) has a great deal of information on their web site regarding credit and credit scoring.
Hereâ€™s another great read:
I know it's a lot of information but I think it's worth taking the time to read through it. The big issue to remember is that your credit score is a rating of how you manage your credit over time.