Mortgage : Home Loans : Refinance : Home Equity Loans

By Maria Ny

Refinancing your mortgage is an effective way to rebuild your credit, particularly if you have recently declared bankruptcy or otherwise have bad credit. With more relaxed underwriting standards, you may be able to get a home equity loan through a sub prime lender, sometimes known as “damaged credit” specialists, as early as six months after your bankruptcy discharge.Mortgage lenders classify borrowers into the following credit categories based upon their credit scores. These categories may vary slightly among lenders. Sub prime lenders offer B, C, and D credit, which means they offer credit to high-risk borrowers. For taking on these high-risk loans, sub prime lenders charge somewhat higher interest rates and fees.

Credit Rating        Credit Score

 A+                         700
 A                          670
 A-                         640
 B                          620
 C                          580
 D                          550
 E                          520

Credit card provider Providian Financial estimated that consumers with an average score would reduce card finance charges by $76 annually if they raised their score by 30 points. Mortgage refinancing through sub prime debt consolidation loans alone can help raise your FICO credit scores by at least 30 points, especially if you are diligent about keeping up with the monthly payments. If you refinance now to combine a second mortgage (home equity loan or line of credit) into a new 1st mortgage loan while cashing out on equity to consolidate reaffirmed credit card debts and other loans you may have, you save a lot of money. With the new minimum monthly payments being implemented by credit card companies, the savings could be even greater if you refinance now.

Paying down debt and making regular, on-time monthly payments are the fastest ways to re-establish good credit. Fair Isaac & Co. states that paying down your credit card balances by just 34% could raise your scores by almost 2!
0 point,
and paying your bills on time for 6 months could raise your FICO scores almost another 20 points. So, after making your payments on time each month for about 2 years, your FICO credit score should be well above the sub prime rate

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For additional Mortgage Refinancing information
and resources visit Mortgage Refinancing.
(http://www.refinance-refinance.net)
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This entry was posted on Tuesday, July 11th, 2006 at 3:30 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.