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Does cash-out refinance affect your credit scores?



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Yes, a cash-out refinance can potentially affect your credit scores. When you apply for a cash-out refinance, the lender will likely perform a hard inquiry on your credit report, which can temporarily lower your credit score by a few points.

Additionally, if you use the funds from a cash-out refinance to pay off high-interest debt or other outstanding balances, this can have a positive impact on your credit score by reducing your overall debt levels and improving your debt-to-income ratio.

However, if you do not use the funds from a cash-out refinance responsibly and end up accumulating more debt, this can have a negative impact on your credit score in the long run.

It’s important to carefully consider the potential impact on your credit score before pursuing a cash-out refinance, and to make sure that you have a solid plan for how you will use the funds and manage your debt going forward.

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