How to Refinance a House With Poor Credit
For whatever reason, you are late paying your bills and that makes your credit score go down to the point that you cannot borrow your way out of the problem. It's a “Catch-22” and you have no idea how to solve it. Fortunately for you, there may be an answer: refinance your house. There's a way to do it, but it will take a lot of effort.
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Instructions
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Send away for your credit reports from the three bureaus, Experian, Equifax and TransUnion. A federal law entitles to all three free, once each year. Go over them carefully for errors and use the forms with each report to have incorrect information stricken from your file. Many reports may have negative information that comes from someone else's record, not your own, or may say that some of your accounts have been defaulted when they haven't. Having those errors stricken from your records can raise your credit score by 100 points or more.
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Consider using a credit-counseling company. When your credit score is low, it means that you need to reduce your debts and adopt a budget, and a credit-counseling company can help with both. They will contact each of your creditors to alter the terms of your agreements with them. For example, they might lower both the interest rate and amount you owe for the promise of regular monthly remittances. A credit-counseling company will also help you with a budget and arrive at a monthly payment that you can afford. If you take their advice, your credit score is likely to rise, which will make it easier to refinance your mortgage.
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Try to get a home-equity loan, if you've built up equity in your house. If your home has appreciated in value since your purchase, all the better. You can use some of that equity that's accumulated and pay down some of your bills. That will probably result in the credit bureaus raising your score. which will make it easier to refinance your mortgage.
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Shop for the best terms and interest rate. People with bad credit tend to accept the first offer they receive to refinance their homes, thankful that a lender would loan them money. However, it's better to have several responses so you can be sure that you make the best choice.
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References
- Photo Credit $100 house image by Paul Heasman from Fotolia.com
