Can Bad Credit Stop You from Refinancing?
Refinancing your home loan can be a smart move — whether it’s to lock in a lower rate, access equity, or consolidate debts. But what happens if your credit score isn’t perfect? Can bad credit stop you from refinancing altogether?
The short answer: it makes things harder, but not impossible.
In today’s market, lenders look closely at your credit history to assess risk. A good score generally means access to sharper rates and better features. But if you’ve had financial setbacks — missed payments, defaults, or high debts — you may still have options.
Here’s what you can do if you’re looking to refinance with less-than-ideal credit.
1. Start with Your Current Lender
Your existing lender already knows your repayment history. If you’ve been managing despite a few setbacks, they may be willing to restructure your loan, extend your term, or offer a repayment arrangement. Sometimes it’s easier to negotiate here than start fresh elsewhere.
2. Check Your Credit File
Before you apply, get a copy of your credit report from Equifax, Experian, or Illion. This helps you see what lenders will see. Look out for:
Defaults or late payments
High levels of debt or multiple credit cards
Too many recent loan applications
Knowing your position means you can address red flags first, boosting your chances of success.
3. Make a Plan to Rebuild
Bad marks don’t last forever. Paying bills on time, reducing credit card balances, and limiting new credit applications can all help your score recover. Even small improvements can expand your refinancing options.
If juggling multiple debts is the issue, consider debt consolidation.
4. Consolidate Debts into Your Home Loan
Rolling personal loans, credit cards, or car loans into your mortgage won’t necessarily lower your interest rate if you have bad credit. But it can simplify your repayments — turning several high-interest debts into a single payment.
If your bank won’t help, there are specialist non-bank lenders who work with borrowers who have credit challenges. These lenders often offer more flexible options, though at higher rates.
5. Speak With a Mortgage Specialist
Refinancing with bad credit isn’t a one-size-fits-all process. Mortgage brokers can help by:
Reviewing your credit profile and financial situation
Identifying lenders open to bad credit applications
Structuring your refinance in a way that works for you
A broker’s expertise and network can save you time, stress, and rejections.
Bottom Line
Bad credit doesn’t have to stop you from refinancing — but it does mean you’ll need a strategy. By knowing your credit position, making improvements, consolidating debts, and working with a mortgage broker, you can put yourself back in control.
At Skybridge Capital, we’re MFAA-accredited finance brokers committed to the highest industry standards. Whether you’re rebuilding credit or simply want to explore your refinancing options, our team is here to help.
📲 Contact us today and take the first step toward a stronger financial future.