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Home Refinance for People with Bad Credit

This task will not be easy, to be perfectly honest with you. A bad credit history when you are looking to refinance your home makes it difficult. Once you become aware of how the system works, I believe a lot of you will be successful in getting there.

Currently, what is your credit score?

People have credit histories that vary widely, which makes the task of developing a resource to help find specific loans for people with bad credit a real problem. Creating and separating a list of sources into columns based on each credit score range, is about the only thing I can think of that will really help people.

Scores Above 720

If your credit score is higher than 720, your credit is considered to be good to excellent, and you should have no difficulty obtaining refinancing for your home with the lender of your choice and getting prime interest rates.

Scores of 650-720

Credit scores in this range are still considered to be relatively strong, so you should have little difficulty in obtaining a refinance loan. Although lenders will have no qualms about loaning you money, you may have to pay a higher interest rate.

Scores of 620-650

Scores in this range carry a higher risk as far as banks are concerned, but you will probably qualify for a refi loan with the majority of lenders. Don’t expect your interest rates to be the best, however, if your score is in this range.

Scores of 580-620

This score range is definitely more problematic when it comes to refinancing with poor credit. People in this range typically have histories of being delinquent on their bills and represent a significant risk to lenders. If your score is in this range and your past mortgage payments have always been on time, you will probably qualify for refinancing. A history of delinquent mortgage payments, however, may jeopardize your ability to obtain a loan.

The bank considers risk management to be the chief constraint in loaning money to those with bad credit. If your credit score lies in this range, your credit is questionable, and lenders won’t want to assume the associated risk. If you fail to qualify for a refinance by yourself, finding someone to cosign the loan is the next step.

Scores Below 580

Falling in this credit score range makes it nearly impossible to secure a loan without first finding a cosigner. Lenders consider you to be an unacceptable risk. If my credit score was in this high risk range, and I wanted to obtain refinancing for my home, I would try to aggressively clean up my credit and look for someone to cosign and increase my chances of getting a loan.

Many people don’t know that significantly reducing your credit card debt can have a very positive effect on your credit score. Credit card debt is responsible for greater than 250 of the points on your score. Carrying high credit card balances means your credit score is being damaged. Thirty days after you have eliminated or significantly reduced your debt burden, however, your credit score can be amended to reflect this.

What it comes down to, is that it may take considerable effort for those with poor credit histories to find a refinance loan. If you’re up to the task, you can significantly reduce the cost of your mortgage.

About The Author

Ben Todd

Ben was a seriously broke graduate student with bad credit who after finding himself rejected for any sort of credit card or loan for most of his adult life, finally decided to get his financial life in order. 'He spent several years reading as many financial advice books and blogs as he could.And suprisingly, Ben found he actually LIKED the topic of personal finance; after fixing his own finances, starting his own successful work at home website business, and using his earnings to get out of debt, created echeck.org to help others do likewise!

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