How to Refinance a Loan With Bad Credit

Because of the global economic problems, you may find that you now have bad credit. You may not have the money you once did to ensure that you''re able to pay all of your bills on time. One of the ways that you can get out of debt faster is by refinancing a loan, but you may believe that if you have poor credit, you won't be approved for refinancing. However, that's not always the case. There are certain steps that you can take that will help you refinance. It's possible to refinance all types of loans, including car loans and mortgages.

Instructions

1. Speak with the lenders with which you currently have a loan. Ask to speak directly with a loan officer and talk about refinancing your current loan. In some cases, you'll be able to deal directly with your current lender, who may be able to offer you a refinance that will lower your monthly bills. In some cases, these will extend the life of the loan by a year or more, but your monthly payments will be lower.

2. Search for a lender that specializes in bad-credit refinance. You can find lenders such as LendingTree and K Street Loans that specialize in refinancing a loan for people with bad credit. You can enter your information free of charge and then see what type of rate you'll get (see Resources). Keep in mind that this rate isn't set in stone. You'll still need to speak with the lender and offer more information.

3. Fill out your refinance loan application honestly. Be truthful about your credit score. If you have a low credit score, you need to report it accurately so that the company will be able to give you accurate information. Your credit score will determine the rate of the loan. A bad credit score means higher interest rates.

4. Continue to pay your bills on time for two full years and you'll begin to improve your credit score. At the end of those two years, when your credit score is higher, you'll be able to refinance again. When you can increase your credit score to above 600, you'll qualify for a much lower rate. In some cases, it will be several percentage points lower. It depends on a number of factors, including the refinance company you choose and your credit score.

References

• Tips for Refinancing Bad Credit
• Refinance Bad Credit

Resources

• Bad Credit Solutions
• Lending Tree
• K Street Loans