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Tips for refinancing a mortgage with bad credit

Compare lenders and loan programs to see what you could be eligible for — but depending on your credit score, you might end up with a higher interest rate.


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Poor credit can make it difficult to refinance to a lower interest rate or reduce your monthly payments. But there are options if your credit is as low as 580 — and some lenders offer loans that don’t consider your credit score at all.

Closing costs are generally the same for borrowers of all credit types. But if you have poor credit, you may get stuck with a higher interest rate that can eat away at any potential refinancing savings.

Here are some strategies to help you secure a mortgage refinance with a less-than-stellar credit score.

Work with your current lender

Even if you have poor credit, lenders may still approve your application if you have a strong payment history. Your current lender is in a unique position to try and keep you as a customer and could make a few concessions to help you refinance.

Speak with your lender to see if they’ll work with you. Make sure they know that you’re shopping around for the best rates and loan terms. If they’re not willing to make any adjustments, at least you’ve established a benchmark to compare other lenders.

Shop around

Borrower eligibility varies by lender and loan program. Some lenders are willing to work with a borrower with bad credit and may offer special refinance programs. A few refinance options:

  • FHA streamline refinance. Borrowers with an existing FHA loan can refinance using this program that doesn’t require a full credit check or income verification. Lenders generally prefer a credit score of 620, though some lenders could accept a score as low as 600.
  • FHA rate-and-term refinance. Borrowers with conventional or FHA loans can get lower interest rates or change their loan term. This program may be an option for homeowners with a credit score as low as 580.
  • VA interest rate reduction refinance loan (IRRRL). Although individual lenders may ask for a credit check, the Department of Veteran Affairs doesn’t require a minimum credit score. With an existing VA loan, you could qualify after 12 months of timely mortgage payments.
  • VA rate-and-term refinance. If you qualify for a VA loan but have a conventional loan, refinance your existing home loan into a VA rate-and-term refinance loan.
  • Portfolio refinance. A portfolio loan is a mortgage that the lender originates and services. Borrower requirements can vary, but most lenders are willing to work with bad credit. This program may come with higher interest rates or upfront fees.

Add a cosigner with good credit

A cosigner with good credit can help you secure a refinance. Lenders look at both the primary borrower as well as the cosigner’s borrowing profile when they issue loans. So if your own credit score isn’t strong enough to qualify, adding a cosigner with good credit and income can help your chances of approval.

Added cosigners are equally responsible for the loan, but have no ownership interest in the property.

Remove a co-borrower with bad credit

If the person on the mortgage has bad credit, it may be a good idea to remove that borrower from the mortgage altogether.

There may be legal implications for removing a co-borrower, such as loss of property rights. Consult a lawyer to make sure all parties are aware of the implications of removing a co-borrower.

Find a lender that uses alternative credit data

Some lenders look beyond traditional credit scores to evaluate your creditworthiness. They can look at on-time bill payments, your loan history, assets and other financial measurements to determine if you’re a lending risk.

Compare mortgage refinance lenders

Compare top brands by home loan type, state availability and credit score. Select See rates to provide the lender with basic property and financial details for personalized rates.
Name Product Loan products offered State availability Min. credit score
(NMLS #330511)
Conventional, Jumbo, FHA, Refinance
Not available in: HI, MA, MN, NV, NH, VT, VA
Refinance your home loan using an easy online process.
Axos Bank
(NMLS #524995)
Axos Bank
Conventional, Jumbo, FHA, VA, Home Equity/HELOC, Refinance
Available in all states
Purchase, refinance, and home equity options available with lender fees as low as $0 (restrictions apply).
(NMLS #1717824)
Refinance, Cash-out refinance
Apply in minutes for a refinance quote, including cash-out options, that won't hurt your credit.
(NMLS #1121636)
Conventional, Home equity, Refinance
Not available in: AK, HI, MO, NH, NM, NY, SD, WV
No hidden fees, multiple loan terms, and member discounts available.
(NMLS #1136)
Conventional, Jumbo, FHA, VA, USDA, Home Equity, HELOC, Reverse, Refinance
Available in all states
Connect with vetted home loan lenders quickly through this online marketplace.

Compare up to 4 providers

Alternatively, use the form below to compare rates from multiple lenders on LendingTree's secure site.

How to increase your credit score

In time, you could boost your credit score, increasing your chances to qualify for a mortgage refinance with better loan terms and rates. Here’s what you can do:

  • Pay your bills on time. A strong payment history is a good indicator that you’ll pay back future debts. Consistent payments can up your score.
  • Avoid unnecessary spending. Keep your credit utilization below 30% to show lenders that you don’t overspend.
  • Keep your current accounts open. Closing credit accounts eliminates some of your available credit, which increases your credit utilization ratio. It can also drop the average age of your accounts on your credit report, which also dings your credit score. If your account is in good standing, keep it open.
  • Don’t open new credit accounts. A new account lowers the average account age on your credit report. A new line of credit can also add an inquiry to your profile, which can temporarily drop your score.

Bottom Line

Borrower requirements vary by lender and refinance loan programs. Shop around to get the best deal and take some time to boost your credit score.

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