Bad Credit 2nd Mortgage

There are loans with good low interest rates available for everyone these days. Even having bad credit is not a deterrent from obtaining refinancing or a home equity loan. In fact, getting a 2nd mortgage when you have bad credit can actually help you improve your credit score.

Bad credit is a term that is given to persons who have a credit record that has a lot of adverse information on it about that person’s spending habits. There may have been a bankruptcy in the past, or missed and late payments. They may have encountered problems in life, like divorce or a job loss that made keeping up prompt payments difficult.

Knowing that your credit record is bad is helpful because at least you know where you are starting from. One thing you should do if you want to get a second mortgage but have bad credit is to go to www.annualcreditreport.com and look at all three of your credit records. There are three available you can look at one time each year for free, from Experian, Trans Union and Equifax. These big three credit reporting agencies (CRAs) put together that website for consumers to use to view their credit records. Looking at your own record will have no impact upon your credit record or score.

Make sure all information is correct, and write the CRAs to make any needed corrections. Next you might want to pay for your credit score. This is a small charge, and scores are not generally free. If you are applying for a loan, the lender will pull your credit score and they should gladly tell you what your score is. Do not let anyone pull your credit record until you are actually ready to ask for a loan or it can become another negative on your bad credit record.

Bad credit second mortgages are good for the consumer. Even if the price and fees are higher than those for people who have good or excellent credit, you can get started rebuilding your credit. You can use some of the money from the second mortgage or home equity loan to pay off old bills that are causing problems. Leave accounts open, however. You need open lines of credit to get a better score.

Good credit loans are now out there with interest rates at about 4% to 8%. Bad credit loans will be at higher rates, from 8% to 14%. If you can get the second mortgage with your bad credit, you have a chance to raise your credit score. Once it is up in the good range above 660, you can again refinance at a better rate and pay off the bad credit second mortgage that has high fees and interest rates.

The good news of the day is that even for bad credit there are 2nd mortgage loans available. All interest rates are at their lows today; what you pay for a bad credit second mortgage today may have been what was asked for good credit second mortgages just a few years ago.