Your Home Is Your Treasure
Credit will almost certainly be denied if the person applying has bad credit. Bad credit does not just occur to profligate people who waste their money and do not pay their debt. Even ordinary hardworking people can find themselves on the wrong side of the credit cycle.

Bad credit can arise out of bad investment decisions that lead you to fall into debt. Refinancing can enable you not only to improve your credit but also obtain funds for other purposes.

Why Do People Get Into Bad Credit ?
Bad credit occurs when the lenders blacklist you as an unacceptable lending risk. This means that on balance of the information that they have available, it is not possible or desirable for them to assist you with credit because they believe that you have in the past done things which indicate that you will be unable to do or unwilling to keep to the refinance agreement. Sometimes this information is based on a wrong premise if for example you have been the victim of identity fraud where someone has used your details to obtain credit which they have not paid back.

The second issue is that you yourself may have been guilty of financial mismanagement which has led you to fail to keep to your credit obligations. This means that when you come to make a refinancing agreement you already have information about you that shows your poor credit behavior.

You can be blacklisted for a refinancing project because you are already too committed to other debts. It might be that you are able to successfully pay off your debts on a regular basis but if the lender finds out that you have other loans outstanding, they will worry about whether you have the ability to pay all your debts.

Bad credit can arise of associations with people who have had questionable credit histories. For example you may live in a house or share a house with someone where there have been problems with credit such as county court judgments. Due to the sensitivity of lenders, they will try to restrict the amount of money you can borrow based on the fact that you were once associated with someone who failed to pay a debt.

Remember that the credit companies always keep a record of all your behavior during the duration of your loans. They will then be able to provide this information to the banks at short notice, particularly if they believe that you are going to be asking for too much refinancing as compared to what they think you would be able to pay.

The Solution for Homeowners with Equity
If you are refinancing a loan based on the fact that you have a home which has equity, you will have a far stronger case than if you are just refinancing on the basis that you are taking an unsecured loan. Banks will naturally prefer to have collateral if they are to be paying significant amounts of money for the refinancing of your project. Thus if you have a home with some equity, you are in a better position.