How to Refinance With Less Than Perfect Credit

You can refinance an auto or home loan through a new or existing lender, which essentially means you agree to pay off an existing loan with money from a new loan. The process is moderately easy, but requires a lot of research and legwork. A less than perfect credit score can decrease your chances of receiving a low interest rate -- which is typically reserved for consumers with a higher credit rating; however, it's possible to negotiate a competitive and attractive interest rate for your financial situation.

Instructions

1

Purchase a copy of your credit score from all three of the consumer reporting bureaus. It's common for TransUnion, Experian and Equifax to each report a different credit score for one consumer, so purchase a copy from each bureau to determine your credit score range. For example, your credit scores may range from 680 to 705 depending on the bureau.

2

Raise your credit score as quickly as possible. Pay down the balance on your credit card accounts to within 30 percent or less of each line of credit before each billing cycle closes for an immediate boost. Paying down debt lowers your card utilization rate as well as your debt-to-income ratio, both of which creditors view favorably.

3

Sign with a co-applicant or co-signer -- who is a person who agrees to take equal responsibility for the loan amount. Select a co-applicant with a high score, especially if your credit score has dipped since signing the original loan agreement.

4

Borrow less money when refinancing to lower your monthly payments and thereby reduce your monthly interest fees, which permits more allowable income to pay down your mortgage or auto loan as well as your other credit accounts.