Debunking the Refinancing with Bad Credit Myths

Refinancing with bad credit is often viewed with scepticism and uncertainty. Many myths portray refinancing in a bad light and scare off the uninformed. Such myths propagate misinformation that disparages this viable form of financing.

While bad credit can pose some challenges to the borrower, it is not as bad as the myths make it out to be. You have to know all the facts to get to the truth. Here are five top myths that one can debunk with ease.

Myth #1: Refinancing with bad credit is impossible.

This is not true. Traditional lenders often use a good credit score to determine if a borrower is eligible for a loan. But, specialised lenders are also available for individuals with less-than-perfect credit histories. These lenders know credit scores don’t completely reflect a borrower’s financial status.

Myth #2: Refinancing will always lead to higher interest rates.

While credit scores can influence rates, they are not the only basis. Other factors like income, stability, property value and loan-to-value ratio also affect interest. As such, some borrowers with bad credit may still be able to secure competitive rates based on these.

Myth #3: Refinancing is too complicated.

Like all loan products, refinancing has an application and evaluation process. This process can intimidate some borrowers and convince them it is not worthwhile. Yet, refinancing can be a valuable option for managing debt and improving finances. The process can be straightforward and beneficial with the right guidance and preparation.

Myth #4: Refinancing can hurt your credit score.

Borrowers burdened with debt often avoid incurring more debt. Thus, they believe refinancing with bad credit can harm their credit scores. The reality is the opposite. Refinancing can help credit scores over time. A refinanced loan with better terms will allow a borrower to manage payments better. This situation will then result in an improved credit history.

Myth #5: You don’t need a broker to get refinancing.

Yes. Borrowers with bad credit can apply to specialised lenders for refinancing. Finding the right lender, though, requires extensive comparison and research. Mastering the refinancing process is challenging, and it differs for each lender. Going through a broker like Tiger Finance can make the process easier and faster. Brokers can guide every step and also offer pre-vetted lender options. Allowing you to achieve your financial goals faster.

Achieving Refinancing Success

Understanding refinancing can help a borrower recognise and debunk myths. The next inevitable step is achieving financial goals with refinancing.

After identifying a specialised lender, the borrower can renegotiate loan terms. Lenders may offer lower interest rates or more flexible repayment terms. Some may even have more flexible guidelines and provide short-term refinancing options. These factors can let the borrower improve their credit and finances.

Another path to refinancing is low-doc and no-doc loans, which can be good for those with non-traditional incomes. The minimal documentation requirements give them a chance to apply for refinancing. 

While refinancing with bad credit presents challenges, it remains a viable option for many. Conduct thorough research, consider speaking with a financial advisor, and compare offers from multiple lenders to ensure you find the best possible terms for your situation. Remember, every step taken towards managing your debt is a positive move towards financial stability.

At Tiger Finance, we always guide you every step of the way with loan experts who are well-versed in the current situation in the world of financing. You can get a free consultation with our in-house financing expert without obligation to give you the most accurate picture of your loan situation today.

Contact Tiger Finance today so that we can help you begin your journey to securing the hassle-free loan product you need.