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Does refinancing hurt my credit score and make my mortgage longer?

The loan application, paying off the cards, a longer amortization: what a refinance really does to your credit score and to the interest you pay.

By David Ponce, mortgage broker

Reading time: 3 minPublished on October 19, 2026

A young man looks at his phone, leaning on his kitchen counter, a coffee in his hand.

In brief

At first, a loan application can lower your score a little. Paying off full cards and lines of credit can then help it, especially if you pay everything on time. Refinancing often stretches out the repayment of those debts: the payments go down, but you can pay more interest overall.

The number to remember

30%

To help your credit score, the Financial Consumer Agency of Canada (FCAC) advises using less than 30% of your total credit limit.1

How does it work?

Three effects follow one another: the loan application, paying off the debts, then the years of payments.

  1. The loan application

    A mortgage application is a “hard” inquiry: it shows up on your credit report and can lower your score. If you shop around with several lenders within 2 weeks, the credit bureaus count those inquiries as one, and in many cases the effect stays minimal. Checking your own report doesn’t affect your score.1 11 12 4

  2. Paying off the cards and lines of credit

    The new loan pays off your cards and lines of credit: your credit use drops all at once. Paying off debt can cause a temporary drop in your score in some cases, but it’s generally beneficial for your overall financial health. Consolidating can help your score if you pay on time and keep fewer high-balance accounts.3 8

  3. Paid-off accounts: close or keep?

    Closing an old account can hurt your score: you lose credit history and available credit. Keeping it open, even with a zero balance, helps maintain your history. The real risk is filling it up again.1 8

  4. The years of payments

    Paying on time is the most important part of your score. On the mortgage side, the amortization period is the time it takes to pay it off in full: the longer it is, the lower the payments, but the more interest you pay.1 6

A white-haired man wearing glasses reads over a statement with a pen at the dining room table, next to a cup of tea.

Paying on time, month after month, counts more than anything else in your score.

Example

Made-up example

Credit use before and after

Martin has three credit cards and a line of credit, with $20,000 in total limits. He’s using $18,000 of it.

Total credit limits$20,000
Balances before the refinance$18,000
Use before ($18,000 ÷ $20,000)90%
Balances after the refinance$0
Use after0%

He goes from 90% to 0%, well under the FCAC’s 30% benchmark.

But that $18,000 isn’t wiped out: it’s now part of his mortgage, repaid over many more years. He’ll pay interest on it for longer.

If he keeps his cards open, it all comes down to one thing: not filling them up again.

Made-up example, to show the calculation. The real effect on a score depends on your whole credit file.

What are the downsides, and when isn’t it the right option?

  • Lower payments come at a price: over a longer period, you pay more interest overall.
  • If you fill up the paid-off cards again, you’ll have the mortgage plus the new debt.
  • If the new loan has a higher rate than your current debts, combining them will probably increase your debt.
  • Your score may dip a little when you apply. Avoid making other credit applications at the same time.6 8 10 11

Frequently asked questions

Does refinancing lower your credit score?

At first, a loan application can lower your score a little. Paying off full cards and lines of credit can then help it, especially if you pay everything on time.

Should you close your credit cards after paying them off?

Closing an old account can hurt your score: you lose credit history and available credit. Keeping it open, even with a zero balance, helps maintain your history. The real risk is filling it up again.

Does refinancing make your mortgage longer?

Refinancing often stretches out the repayment of those debts: the payments go down, but you can pay more interest overall. Extending the amortization to lower your payments increases your interest costs.

Related questions

The other guides, and our short answers to frequently asked questions.

Sources

  1. Financial Consumer Agency of Canada (FCAC), “Improving your credit score” (opens in a new tab), consulted on September 25, 2026.
  2. FCAC, “Credit report and score basics” (opens in a new tab), consulted on September 25, 2026.
  3. Equifax Canada, “Does Paying Off Debt Affect My Credit Score?” (opens in a new tab), consulted on September 25, 2026.
  4. TransUnion Canada, “Foire aux questions” (opens in a new tab) (in French), consulted on September 25, 2026.
  5. FCAC, “How long information stays on your credit report” (opens in a new tab), consulted on September 25, 2026.
  6. FCAC, “Mortgage terms and amortization” (opens in a new tab), consulted on September 25, 2026.
  7. FCAC, “Mortgage relief options” (opens in a new tab), consulted on September 25, 2026.
  8. FCAC, “Debt consolidation” (opens in a new tab), consulted on September 25, 2026.
  9. ZenFi, “Frequently asked questions” (opens in a new tab), consulted on September 25, 2026.
  10. Autorité des marchés financiers (AMF), “Dossier de crédit” (opens in a new tab) (in French), consulted on September 25, 2026.
  11. Equifax Canada, “4 Credit Score Myths Explained” (opens in a new tab), consulted on September 25, 2026.
  12. Equifax Canada, “Hard Inquiries on Your Credit Report” (opens in a new tab), consulted on September 25, 2026.

Sources checked on September 25, 2026. The examples illustrate a calculation; they don’t promise a result.

This guide gives general information, not advice tailored to your situation. Terms vary from one lender and one file to the next.

This guide is a translation of the French version, which is the reference text.

Groupe ZenFi (9498-0356 Québec inc.), a Quebec mortgage brokerage firm registered with the Autorité des marchés financiers (AMF), client number 3003043028.

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