Bad credit can come into your life in a lot of ways. You may have had bad spending habits and now have a low credit score. You may have gotten in over your head financially and have a lot of late or missed mortgage or credit card payments. You may even have gone through some serious and unexpected life changes such as a death in the family or a divorce. Or you may have a bankruptcy or foreclosure on your record.

If you have bad credit, lenders consider you to be a high risk borrower. High risk borrowers often have a hard time finding lenders who will take the risk to lend them money. If you can find a lender who is willing to take the risk, they will usually ask you to share in that risk by charging you additional fees or requiring that you accept a higher interest rate on the loan you are attempting to get.

Attempting to refinance now that the mortgage industry has taken a hard hit is more difficult than it was a few years ago when the real estate industry was booming. If you can get a lender to refinance even though you have bad credit, your refinance will cost you more money in the long run than it will for someone in the same position who has good credit. Unfortunately, for a great number of people nowadays, bad credit will keep them from being able to refinance.

If you can wait a while to refinance or can't find a lender who will do a refinance for you, you can work to improve your credit score in order to improve your chances of being able to refinance.

The first thing you should do when working to improve your credit score is to check your credit report. As accurate as you may believe your credit report to be, and as much as you believe your bad credit score is deserved, mistakes do happen. Checking your credit report for errors and having those errors corrected can sometimes make a significant difference in your credit score.

The next step is to stop using your credit cards and pay down your debt. Work out a budget, including the minimum payments on all of your loans. Cut back on other expenses in order to get under budget. Choose one loan with a small balance, such as a credit card, and start making larger payments on it until it is paid off, then choose another loan and do the same thing.

When you are paying down your debt, it is extremely important that you make all of your payments on time. Even if you are making significant headway on paying off your loans, if you have late payments your efforts won't make much of an impact on your credit report.

If you are able to find lenders who will refinance your home loan even though you have bad credit, talk to several lenders and ask what interest rate they can offer you. Get a Good Faith Estimate, which will disclose the fees involved in refinancing. By sitting down and comparing these offers with your current financial situation, you will be able to determine whether refinancing immediately or waiting to refinance will be the better option for you.