 TITLE: Is Cash-Out Refinancing Better Than a Home Equity Loan? CONTENT: How a Cash-Out Refinance and Home Equity Loan Affect Credit\n-----------------------------------------------------------\nOverall, the amount you owe and the impact to your credit scores may be similar with a cash-out refinance and a home equity loan. The main difference is that a cash-out refinance will lead to paying off and closing your original mortgage, while a home equity loan only will be an additional loan. However, the paid-off loan can stay on your credit report for up to 10 years and continue to impact your scores during that time.\nHome equity loans and cash-out refinancing both involve taking out a new installment loan. In either case, lenders may review your credit reports with a hard inquiry. Also, when your loan is added to your credit reports, the average age of accounts on your reports will decrease, and your loans will have a high balance relative to their original loan amount. These factors can all hurt your scores a little, but they're minor factors.\nOnce you start to repay your new loan, your on-time payments can be reported to the credit bureaus and help your credit. Having a long history of on-time payments can be especially important for improving your credit scores. END