While credit-repair scams can be found in abundance, the best way to improve your credit is to take steps to reduce your debt and to pay your bills on time. A bad-credit home loan, whether it's a home refinance or a home-equity loan, can help your cash flow, solve your debt problems and reduce your credit problems.

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If your credit score is low because you're currently in debt, restructuring your mortgage debt can help you pay your bills. If you've already paid off your debt but your credit score remains low because of past problems, a new mortgage can establish new credit and will likely come with a lower interest rate so you can stash away more cash for an emergency and investments.

Decision: Refinance or home-equity loan

Your first decision should be whether you want to refinance your existing mortgage or take out a home-equity loan. If you have just 5 percent or less in home equity, a refinance will likely be your only option. Bad-credit lenders are more willing to approve a refinance than a home-equity loan, so if your credit problems are severe, refinancing will be easier. A home-equity loan can be a good option if you have significant equity and want to use it to pay off high-interest debts. Complete the form on this page to get the lowest mortgage rates for your refinance or home-equity loan.

Three factors that impact your credit repair

1.Your home equity. If your home value has increased, you could have cash in your home that you can tap to pay off other bills. If not, a refinance can still help you. If you can lower your monthly mortgage payments, you'll have extra cash to pay other debts more quickly.

2.Your cash reserves. If you have cash savings, you can use it in a variety of ways for credit repair. You can use the cash to pay off debt, you can pay points to reduce the interest rate on your refinance or you can just keep it in the bank to prove to a lender that you have improved your financial habits. Whatever you choose, make sure you have an emergency fund in place with three to six months of expenses so you don't have to rely on a credit card for an unexpected bill.

3.Your debt-to-income ratio. Most lenders restrict loan approvals to borrowers with an overall debt-to-income ratio of 43 percent or less. If you've paid off some debt or your income has increased, this will help your chances of a loan approval. The lower your debt-to-income ratio, the better.

Once you've gotten a handle on how to fix your credit problems, remember you need to take another step: Keep a vigilant eye on your spending and your credit in the future so you don't get into trouble again.