The truth is that there's more risk for a lender when working with people with bad credit, so the interest rate is a little higher than for those with perfect credit. Anyone who tells you anything different is trying to rip you off. In mortgages as in life, if it sounds too good to be true it probably is.

Because of the higher risk involved, lenders might also restrict the percentage of a home's value that they're willing to lend. For example, with perfect credit it's actually possible to borrow more than a house's value. With bad credit, lenders might only allow you to borrow 90% or 95% of a home's value. However, with a good rental or mortgage payment history even imperfect credit borrowers can qualify for 100% financing.

You've been told you have bad credit, but do you know what's actually on your credit report? Before you can fix a problem, you have to know exactly what it is.

The first step is to get a copy of your credit report. We have found several options for you. Just go to our Credit Reports Section (link opens in new window) and select one.

You can often improve your credit score by challenging items which appear on your credit report. Some credit reports contain duplicate items so that you are being penalized twice for a single late payment. Many creditors will also work with you to remove past negative items from your report if you have been a good payer since those late payments.

There are enough lenders willing to work with bad credit borrowers that there is no reason to jump at the first offer you get. Odds are that if that lender can help you, so can someone else - perhaps even at a lower interest rate or with lower closing costs. In order to make sure you're getting the best possible rate for your situation you'll want to get quotes first.

Just like with perfect credit borrowers, you are a valuable customer. While big banks are looking for a different kind of borrower, you are exactly the kind of customer these specialized lenders are trying to find. These lenders work with mortgage quote sources to help them locate people just like you. You should take every advantage of this whether you're looking to refinance or purchase a home

Before we answer that question, our question back to you would be: Are you sure they've all said no? Often because one or two have said no to bad credit, people give up and assume that everyone else will too. As we've pointed out above, before you give up on getting the mortgage you want, make sure you have exhausted all your possibilities by checking out the mortgage quote sources we've put together for you.

In some cases, no lender will be able to help. It's unfortunate, but we'd be less than honest if we said that every single person with bad credit who wants a mortgage is going to be able to get one. In the case of refinances, there simply may not be enough equity in the home for a lender to work with. For purchases, sometimes the lender wants a larger down payment than you can afford right now.

If you're looking to refinance to consolidate debts, check out our Debt Consolidation section for information on debt consolidation services which can help you even when you don't qualify for a mortgage. For other options to help you reduce your monthly debt payments, you can also look at restructuring your car loan to reduce your monthly payments in our Auto Loans section, or consolidating your student loans in our Student Loans section.

For quick cash, you can check out our Payday Loans section.

If you need a new place to live and mortgage companies are saying no, you can try Apartments.com.