If you are one of those homeowners who have bad credit, but have seen the recent commercials on television and radio advertising low interest rates and want to take advantage of these interest rates by refinancing, you may be wondering if you are going to be able to do so with your current credit score. One thing is certain, people with bad credit are often offered a much higher interest rate than those with good credit and your dream interest rate may be out of reach if you have bad credit.

Banks and other finance companies know that they can get away with charging higher fees and higher interest rates to someone who wants to refinance loans with bad credit. Knowing how to refinance with bad credit, and what to look for, can save you a lot of headache and extra fees by going with someone who is trying to take advantage of your bad credit situation. If you go to one of the finance companies doing advertising at low interest rates to refinance bad credit may cause them to quote you a higher interest rate, explaining that the low low interest rate is for those with an A+ credit rating.

However, this doesn’t mean that all is lost when it comes to the bad credit refinance. You most likely can still get your loan, and if you shop around and refuse to take bad quotes laying down you may end up getting yourself a decent interest rate and favorable terms. Of course, if you can wait a few years to fix your credit before you begin shopping for a refinance, assuming you cannot find a great deal in the first place, then this might be your best option, as even a small increase in credit score can put you over the top and get you the interest rate you want.

One of the more recent trends is the springing up of sub prime lenders who offer refinances with bad credit. Sub prime simply means that the interest rate is higher than that of the “prime” rate that may be offered by the same company or comparable companies to those with good credit. These type of lenders are also called Second Chance lenders or Second Chance mortgages. In our current economy they are quite prevalent and exist simply to make money off of people who have bad credit, so be cautious when dealing with what is obviously a sub prime lender.

Many people don’t realize that there are other factors that influence your approval than your credit score. One of the bigger things is whether or not you can afford the refinance. Your debt to income ratio will cause several points to be dropped off (in the lenders scoring system) often many more points than a low credit score would give you. Ask your lender what factors affect your approval and try to make as many of them as possible positive so that these factors will work for you and not against you.