Direct answer: Refinancing typically costs a few points to
~20 points for a few months, from three small hits: a hard inquiry (~5 points,
fades in months), the old loan closing, and a brand-new account lowering your
average age. Scores usually recover within 3–6 months of on-time payments. Rate
shopping is protected: all mortgage inquiries within a 14–45 day window count as
ONE.
The three mechanisms, sized
- Hard inquiry: ~5 points, only counted for a year. The shopping window (14 days on older models, 45 on newer) means quoting five lenders costs the same as quoting one — shop hard, inside one window.
- Closed account + new account: your seasoned mortgage closes and a day-old one appears, denting average account age. This is the biggest and slowest-fading component, and it's unavoidable — it's what refinancing is.
- New-credit flag: a fresh large account briefly reads as risk; it neutralizes with a few on-time payments.
When the dip actually matters
Almost never — unless you're about to apply for something big. The two real cautions: don't refinance weeks before a car loan or new mortgage application where a 15-point dip could cross a pricing tier (see how tiers price), and don't open other new credit mid-refinance — lenders re-pull before closing, and new debt can re-trigger underwriting.
What refinancing does NOT do
- It doesn't erase your payment history — the old loan's on-time record stays on the report for ~10 years and keeps helping.
- It doesn't "reset" your credit — utilization is a card concept; installment loans don't carry it.
- Checking your own rates with soft-pull prequalifications costs zero points — use them to narrow the field before the hard-pull window.
Perspective: points vs dollars
A well-chosen refinance saves tens of thousands (the break-even math); the credit cost is a temporary handful of points. Optimize the sequencing — quotes in one window, no other applications nearby — and then let the dollar math, not the score anxiety, make the call.