Refinancing Tips · March 3, 2025
Can You Refinance With Bad Credit?
Lower credit doesn't automatically disqualify you from refinancing. Here are your options, realistic expectations, and the fastest paths to a better rate.
Bad credit makes refinancing harder — but sometimes not impossible. Here's an honest breakdown.
Minimum Credit Scores by Program
- Conventional: 620 minimum (680+ for best rates)
- FHA: 580 minimum
- VA: No VA minimum; lender overlays typically 580–620
- USDA: 640 typical minimum
FHA Streamline: The Best Bad-Credit Option
If you already have an FHA loan, the non-credit-qualifying FHA Streamline doesn't require a credit score check at all. You simply need to demonstrate on-time payments on the existing loan. One of the most accessible refinance programs available regardless of credit.
VA IRRRL: Same Advantage for Veterans
No VA-imposed minimum. Lender overlays typically 580–620. Significantly more accessible than conventional for veterans with credit challenges.
Strategies to Improve Your Position
Wait and rebuild: 6–12 months of consistent positive payment history can add 40–80+ points. From 600 to 660 dramatically changes your options.
Pay down revolving balances: Reducing credit card utilization below 30% can add 30–50 points relatively quickly.
Dispute inaccuracies: Incorrect late payments or collections sometimes removed — can add significant points.
Add a co-borrower: A spouse with strong credit can help qualify for programs your individual score can't access.
At HMS, we work with multiple lenders with different credit appetites. What one lender declines, another sometimes approves. Call 309-222-8286.