Written by

Steven Lee

Mortgage Director, ODIN Mortgage & Tax

10+ years in Australian banking and mortgage lending

Last reviewed

Updated on: June 10, 2026 View profile →

Does Refinancing Affect Your Credit Score in Australia?

Are you worried that refinancing your mortgage may mess with your credit score? You’re not alone.

With the rising number of refinancing applications following the RBA rate cuts, it’s more important than ever to understand the potential impact on your credit.

A drop in credit rating can affect your borrowing power, increase your interest rates, and cause stress in future applications.

This article breaks down exactly how refinancing affects your credit score, the short and long-term impact, and how you can minimise the risk and even boost your score over time. Let’s explore the full picture.

Understanding Your Credit Score: An Aussie Perspective

Your credit score is a key number that tells lenders how risky it might be to lend you money.

In Australia, it ranges from 0 to 1,200 depending on the bureau, and the higher the score, the better.

Lenders use this score to decide if you’re eligible for a loan, what rate to offer, and how much you can borrow. Refinancing your mortgage? Your score plays a big role in the outcome.

Having a good score (660+) makes you more attractive to lenders. A score of above 800 is considered excellent.

It’s also important to note that your credit score is dynamic. It can change monthly based on your financial activity.

Why Does Credit Score Matter for Mortgage Refinance?

Your credit score is based on your financial history—things like loan repayments, credit card usage, defaults, and even how often you apply for credit.

When you refinance, your lender checks this score to evaluate your creditworthiness.

A better score often means:

Access to lower interest rates
More flexible loan terms
Higher chances of approval

A low score, on the other hand, may limit your refinance options or lead to higher rates.

Refinancing without understanding your credit score can lead to missed opportunities or costly outcomes. Before you apply, it’s smart to check your credit score using one of Australia’s free credit services like Equifax, illion, or Experian.

How Australian Credit Reporting Works

In Australia, credit reports come from three main agencies: Equifax, illion, and Experian.

Each of these agencies uses its own scale to measure credit scores:

Experian: 0 – 1,000
Equifax: 0 – 1,200
Illion: 0 – 1,000

Australia don’t use the FICO scoring model like in the US. Instead, Australia follows Comprehensive Credit Reporting (CCR), which includes positive info like on-time repayments, not just defaults.

CCR gives lenders a more complete view of your credit behaviour. This means that responsible financial habits, like paying bills on time, can help raise your credit score, not just lower it.

The good news? One missed payment won’t ruin your score forever, and refinancing doesn’t automatically mean a downgrade.

👉 Check out: What Is a Good Credit Score for a Home Loan in Australia?

The Immediate Impact: Does Refinancing Hurt Your Credit?

Yes, but usually only slightly—and temporarily.

When you apply to refinance, your lender performs a hard credit inquiry. This may drop your credit score by 5–10 points.

It’s a normal part of the process and won’t impact you long-term if managed correctly. Most Aussies see the score bounce back within a few months.

If you’ve been consistently making repayments, the dip will likely be small and short-lived. It’s only a concern if you’re refinancing frequently or already have a low score.

The Role of the Hard Inquiry from Refinancing

Every time a lender pulls your credit report, it’s logged as a hard inquiry.

Too many inquiries in a short time can suggest financial stress or over-borrowing.

To reduce the impact:

Only apply to 1–2 lenders
Use a broker to compare options first

Spacing out applications is key to protecting your score. A single inquiry isn’t harmful, but five in one month can raise eyebrows.

Expecting a Temporary Credit Score Drop After Refinance?

Yes, it’s common to see a small drop shortly after refinancing.

This is mainly due to the inquiry and any changes to your account structure (e.g., closing an old loan).

If the previous loan was long-standing, closing it can reduce the average age of your credit accounts—a factor that contributes to your score.

But don’t panic—if you keep up repayments, your score will usually recover in three to six months.

Does Refinancing Multiple Times Impact Your Credit Score?

Refinancing several times in a short span can raise red flags for lenders.

That’s because it involves repeated credit checks and may suggest instability.

However, spacing out your refinances (e.g., once every 12–18 months) and maintaining strong repayment habits can help avoid issues.

Each refinance application should be intentional and backed by a genuine financial benefit, such as lowering your interest rate or consolidating debt.

👉 Check out: How Often Should You Refinance Your Home Loan?

Long-Term Effects: Impact of Refinancing on Credit Score

Long term, refinancing can actually improve your credit score if managed well.

Why? Refinancing can lower your repayments, reduce financial stress, and help you build a better repayment record.

Over time, this steady repayment boosts your credit score.

Potential for a Better Credit Rating

If your current loan is high-cost and hard to manage, switching to a better deal can help you stay on top of your repayments.

Consistent, on-time payments are one of the strongest factors for improving your score.

By reducing your interest burden, you can use the savings to clear other debts, which further boosts your credit health.

Build Score With Responsible Repayment Habits

After refinancing, the best thing you can do is pay on time, every time.

Other ways to support your score:

Avoid late payments
Keep credit card balances low
Don’t apply for new credit right away

Also, consider setting up direct debits to avoid missing repayments. These small habits have a big, long-term impact.

Credit Score Recovery After Refinancing: What to Expect

A small dip in your score is expected right after refinancing.

But most people see recovery within 3–6 months, assuming repayments are made on time.

According to CommBank, your score may even improve over time. If you’ve consolidated debt into a single lower-rate loan, the effect may be even more positive.

👉 Check out: How Much Equity Do I Need To Refinance My Mortgage?

AU Expats—Refinance Smart, Protect Your Credit Score

How Long Does Refinancing Affect Credit Score?

Typically, the credit score impact from refinancing is short-lived.

The hard inquiry stays on your file for twelve to twenty-four months, but the effect fades quickly.

What matters more is how you manage your new loan moving forward. Long-term repayment history carries far more weight than a single inquiry.

Factors Influencing the Timeline of Credit Score Recovery

The exact recovery time depends on:

Your prior credit history
How many inquiries you have had
Whether you’ve had any recent late payments

If your score was strong before refinancing, it’s likely to bounce back faster.

Recovery might take a little longer if you have recently missed repayments or already have a low score.

How Can I Tell If My Credit Score Has Improved?

To find out whether your credit score has gone up, here are a few ways to check:

Request Your Credit Report

You’re entitled to one free credit report each year from Equifax, Experian, or Illion. Reviewing it can help you spot changes that may affect your score.

Check Your Credit Score

Some agencies include your score with your report, while others may charge. You can also use free online tools or bank platforms that offer regular score updates.

Use Credit Monitoring Services

These services track your score and alert you to any changes—perfect for keeping tabs on improvements over time.

Track Through Your Bank or Apps

Many Australian banks and financial apps provide free credit score tracking, letting you monitor progress easily.

👉 Also see: How Many Times Can You Refinance Your Home Loan?

Tips to Minimise Negative Credit Impact While Refinancing

Refinancing doesn’t have to hurt your credit—if you’re strategic. Here’s how to keep your score healthy when refinancing.

Compare Before You Apply

Instead of applying directly with multiple lenders, work with a mortgage broker who can shortlist the best options based on your profile. You can also use soft credit check tools offered by some lenders to gauge eligibility without triggering a credit inquiry.

Limit Applications

One or two formal loan applications are usually fine. But if you submit many in a short time, it can raise red flags with lenders and hurt your credit.

Keep Old Accounts Open

Even if you’re closing an old loan through refinancing, try to keep your oldest credit card or line of credit open, especially if it has no annual fee. This helps maintain the age of your credit history, a key factor in your credit score.

Pay on Time

Every repayment counts. Your new lender will report your repayment behaviour to the credit bureaus. One late payment can do more damage than a refinance ever will, so set up direct debits or reminders.

Avoid Other Credit Applications

Don’t apply for credit cards, personal loans, or car finance while refinancing. Multiple credit activities in a short span may signal financial instability to lenders.

👉 Check out: Should I Refinance My Mortgage After RBA Rate Cuts?

Refinancing doesn’t have to hurt your credit—if you’re strategic. Here’s how to keep your score healthy when refinancing.

Smart Strategies for Credit Check for Refinance

Before you apply:

Request your free credit report from Equifax, Illion or Experian
Fix any errors before applying
Pay down any outstanding debts if possible

Knowing where you stand helps you apply with confidence.

You can also request a “soft check” from some lenders to get a sense of your approval chances without impacting your score.

Managing Your Finances During and After Refinancing

Use refinancing as a chance to reset your budget.

Track spending
Build a buffer for repayments
Avoid taking on new debt too soon

Better finances = better credit in the long run.

Also, avoid closing multiple credit accounts unless necessary, as this can shorten your credit history.

👉Check out our Refinancing Tips for Australia for maximising your savings in the refi process.

Is Refinancing the Right Move for Your Financial Health?

Whether refinancing is the right move depends on your goals.

If you’re chasing a lower rate, consolidating debt, or freeing up equity, it’s worth considering.

Just make sure you’re not refinancing too often or for the wrong reasons. Always assess the total cost of refinancing, including exit and entry fees, to ensure the benefits outweigh the cost.

Weighing the Benefits Against Potential Credit Score Changes

Short-term hit vs long-term gain?

A small dip in your credit score might be worth it if refinancing saves you thousands in interest or eases financial pressure. It’s all about your broader financial picture. Speak to a mortgage expert or financial advisor to map out the best move.

When Refinancing May Not Be the Best Option for Your Credit

If your credit score is already low or you’ve recently missed payments, refinancing your mortgage may not help right away. In some cases, it’s better to wait and build your score first.

Can You Refinance with a Low Credit Score?

Yes—but your options may be limited.

Some specialist lenders offer bad credit refinancing, but rates may be higher and terms stricter.

It helps to speak with a broker to explore your options and be clear on how soon you can refinance. You may also be able to improve your score slightly in a few months by clearing debts or correcting errors before applying.

AU Expats—Refinance with Confidence

Key Takeaways

Refinancing can slightly lower your credit score at first due to a hard inquiry.⬆️
Score recovery usually happens in 3–6 months if you keep up repayments.⬆️
Refinancing multiple times too quickly can hurt your score, so space them out.⬆️
You can actually improve your credit over time through responsible loan management.⬆️
Use smart strategies to minimise the credit impact, like checking your report and limiting applications.⬆️

Does Refinancing Affect Your Credit Score in Australia?

Understanding Your Credit Score: An Aussie Perspective