Bad Credit, Less than Good Credit

by Marianne Salina
LoanPage Columnist

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Are you seeking a loan but fear how a poor credit history will impact your success? Do you have a mortgage that isn't always paid on time? You are not alone. There are many homeowners who, because of credit history or late mortgage payments, are afraid to approach lenders. First, learn if you are considered a high-risk borrower. Then, you may consider refinancing in order to lower your mortgage interest rates. Here are a few guidelines that may indicate less-than-perfect credit:
  • » Two or more 30-day delinquencies in the last year
  • » A FICO score of 620 or lower
  • » A foreclosure in the past 24 months
  • » Limited ability to cover family expenses

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Refinancing

Whether you have bad credit or not, it is important to consult with a financial advisor to determine your credit standing. Oftentimes, it may just be a matter of reducing your monthly debts, which can be achieved through locking in at lower mortgage interest rates or consolidating debts under one home loan. Refinancing your mortgage will allow you to take advantage of drops in market interest rates.

Benefits

Refinancing can also allow you to consolidate other high interest debts under your new mortgage, so that you avoid paying higher interest rates. In order to determine if refinancing is a good option, you should ask your financial advisor if changing your mortgage interest rates will outweigh the costs of refinancing. With lower rates and manageable monthly payments, you can begin to rebuild good credit along the way.

Sources:

Candidates for a "Bad Credit" Loan, E-Loan
Refinancing Cash Back Lower Rates, By Chris Sims, Lending Expo

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