Collaborative filtering tries to predict the ratings of a user over some items based on opinions of other users with similar taste. The ratings are usually given in the form of a sparse matrix, the goal being to find the missing entries (i.e. ratings). Various approaches to collaborative filtering exist, some of the most popular ones being the Singular Value Decomposition (SVD) and K-means clustering. One of the challenges in the SVD approach is finding a good initialization of the unknown ratings. A possible initialization is suggested by [1]. In this paper we explain how K-means approach can be used to achieve the further refinement of this initialization for SVD. We show that our technique outperforms both initialization techniques used separately.