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Refinance Bad Credit

If you’re considering refinancing your mortgage and have less than perfect credit, there are steps you need to take before applying to improve your credit. Mortgage approvals are becoming more difficult these days even for homeowners with good credit. If you are going to have your application for refinancing approved you will need to improve your finances not only to get approval, but to qualify for the lowest possible mortgage rate. Here are several tips to help you refinance with bad credit.

Check Your Credit History First

The first thing you’ll need to do before contacting a mortgage broker is to request copies of your three credit reports and carefully check for errors. Your credit records are maintained by three separate companies that do not always share information. These three credit agencies are Equifax, Experian, and Trans Union. You don’t have to pay for these reports as Congress passed a law requiring each of them to provide you with one free copy of your credit history every 12 months. You can request these free credit reports by visiting the website annualcreditreport.com.

Dispute Inaccurate Information

If you find mistakes in your credit history you’ll need to dispute the error and allow enough time for the correction to be reflected in your credit score. It is not uncommon to have mistakes with one credit agency that are not reflected in the other credit agencies. Mistakes are common so it is very important to review your credit reports every year and follow that credit agency’s procedure for disputing inaccurate information as quickly as possible.

Pay Your Bills on Time

Late payments kill your credit score. Always make your payments on time, especially your mortgage payment. When paying your credit cards make sure you pay at least 20% more than the minimum payment that is due in a given month. Pay your credit cards down to at least 50% of the available balance. You can shuffle balances around between cards that have balances less than 50% if you don’t have the cash on hand to pay your cards down.

Work With a Mortgage Broker

Mortgage brokers have access to programs that you might not be able to find on your own. A good mortgage broker can help you not only improve your credit but can often work around your financial shortcomings to get your loan approved. You have to be careful when choosing the right person as brokers work for a commission and the loans that bring them the largest commissions are not necessarily the best loan for your situation. You can learn more about finding the right person to originate your mortgage without paying too much by registering for my free mortgage video tutorial.

{ 1 comment… add one }
  • Skipper November 21, 2008, 12:58 pm

    Paid cash for a sfr in Missouri for $25K. Property will appraise at $100K (partial rehab complete), and I really need to refinance badly.

    The problems are, no new trade lines and fico' under 500.

    Could use some help, minimum 75%ltv.

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