Refinance with bad credit allows you to lower your monthly interest by creating a new loan on your home. In addition, if you have an adjustable rate mortgage, you may want to refinance into a fixed rate mortgage to avoid the adjusted rate. However, if you have bad credit, you may think that it is impossible to refinance your mortgage. While it is true that you may not qualify for the very best rates out there, you can still refinance with bad credit. 

First, determine your credit score before you shop around with lenders for the best rate. The three credit bureaus must provide you with a free copy of your credit report every 12 months. You can obtain a free credit report from each of the three agencies by visiting http://www.annualcreditreport.com. Review the report to determine if any misrepresentations appear, and if you find any discrepancies with your records, contact the credit bureau immediately. 

Next, determine if you can wait to refinance while you begin to repair your credit. For example, if you have made a few late payments on your credit card or your credit card is reaching its maximum limit, consider practicing some good credit habits to improve your credit. For example, make all payments on time and pay more than the minimum monthly payment toward your debt. Your credit score may improve in as little as one month if you make big changes to your debt like paying off your high balance credit cards. Check back on your credit score within a year to see if your changes have improved your credit score. An improved credit score will help you obtain a better refinance rate. If you cannot wait to refinance, there are several things to consider before you refinance with bad credit. 

Shop around to as many lenders as possible to find the best rate for your bad credit score. Be advised, however, that your bad credit is going to make it more difficult for you to refinance, and you will not receive the best rate available for your loan. The lower your credit score, the higher the interest rate is going to be. In some cases your current score may be lower than the one you may currently qualify for given your low credit score. In addition, if your low credit score is due to missed mortgage payments, you may be unable to refinance at all. You should compare your current interest rate on your mortgage with rates available to you before making a decision regarding whether you should refinance with bad credit. Also consider that a lender will charge you a fee to refinance your loan no matter your credit score. 

If you have additional questions regarding how to refinance with bad credit, contact a mortgage broker or non-profit credit counseling organization. Obtaining a refinanced loan with bad credit can be a complicated process, with many decisions to make.  Therefore, to learn more about dealing with debt, visit www.ftc.gov/MoneyMatters. In addition, if you have questions regarding your rights in terms of debt collection, visit http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm.