You have poor credit because you have defaulted on your credit obligations during the last seven years. Peer-to-peer lenders will only allow you to borrow money if you have good credit. If you want to refinance with bad credit, you will need to be a homeowner. Provided that you have sufficient equity in your property, you can get a bad credit home loan.
How to refinance with bad credit
Unsecured loans not an option
If you want to consolidate your credit obligations, you will need to be a homeowner if you have a bad credit history. If you do not have any collateral to secure the loan, you will have to pay a usury rate of interest. Most people find that their credit has deteriorated since they experienced problems, so consolidating debt with a more costly arrangement is inadvisable. Refinance home with bad credit
Lenders want to minimise the risk of bad debt appearing on their balance sheets and home equity is their way of achieving that objective. Refinance rates will be more favorable if you have a sufficient amount of equity in your property. Home equity is calculated by subtracting your mortgage and secured loans from the value of your house. Loan refinance and affordability
The provision of security means that you will pay low interest on the loan. However, you will only be approved if you can demonstrate that the repayments are affordable to you. Your income-to-debt ratio will need to be below 36%. The objective is to ensure that you have sufficient disposable income to make the repayments and do not lose your home.
Alternatives to refinancing bad credit
Debt management plans
If you are a tenant, refinancing a home is not an option. Even if it is, do you really want to put your home at risk? A debt management program does not involve taking out another loan, it involves changing the terms of your existing agreements. You will make a single, affordable repayment each month until all of your credit card debt and unsecured loans have been paid off. Debt settlement programs
After a series of negotiations with your creditors, you may be able to eliminate up to 50% of your unsecured debt. Like mortgage refinance, you will then make a series of monthly payments until the remaining debt is cleared. You already have a poor credit rating, so getting your personal finances back under control is your number one priority.