Finding Mortgages and Refinancing With Bad Credit

So, what do you do if your credit reports make you want to hide under the covers and never use your credit cards again? Relax, you can turn your ratings around.

Mortgage lenders look at the "age," dollar amount, and payment history of your different credit lines. That means opening accounts frequently, running up your balances, and paying on time or not at all can impact your credit score negatively. Just changing one of these components of your spending behavior can positively affect your credit score. Also, bad credit does not necessarily mean you can't get a mortgage, it will just come at a higher cost.
"Why Me?"

If you are having trouble getting a loan, ask your lender why. Chances are it will be one of these reasons for rejection:

Overextended credit cards: If you miss payments or exceed your limit, that's a red flag to lenders.
Failure to pay a previous or existing loan: If you have defaulted on other loans, a lender will think twice.
Bankruptcy: Filed for bankruptcy in the past seven years? You might have trouble getting a loan.
Overdue taxes: Lenders check your tax payment record.
Legal judgments: If you have a judgment against you for such things as delinquent child support payments, it could harm your credit.
Collection agencies: Lenders will know if collection agencies are after you.
Overreaching: You might be seeking a loan outside what you can reasonably afford.

Fixing Bad Credit

Many financial experts suggest common sense strategies to turn your credit report around:

Always pay your minimum balance on time. Let's face it, credit card companies make profits on you when you maintain a balance. Just make sure you send them their due each month. Better yet, only spend what you can expect to pay back at bill time.
Try to reduce balances. Even throwing in an extra $20 to $50 each month will help reduce the overall debt, and paying extra looks good on your credit report.
Don't run up the entire balance: Having $100 left on a $10,000 line of credit doesn't look so hot. Lenders look at the dollar amount of credit available to you and, from there, what percentage of that credit you have used. In other words, if you have a card with a $1,000 limit and you've spent $900 on that card, you've used 90% of your available credit; this looks a lot worse than having a balance of, say, $200 on the card.
Throw away new credit card offers. Don't apply for new cards and lines of credit right before you go home shopping. And when those clerks in the stores offer you a discount if you just open an account, say no. Banks will not turn a blind eye to numerous inquiries for new credit