Although it's impossible to significantly increase your credit score within a short period, individuals with poor credit can take specific steps to try and get a lower rate on their home loan. Bad credit mortgage loans have higher interest rates and fees. These applicants are risky, and lenders make them pay for past mistakes. Yet, there are ways to attain a lower rate on a sub prime loan. Here are three tips to help you save money on your bad credit home loan.

1. Get Control of Finances: Bad credit will not disappear on its own. If you want to buy a home and receive favorable terms, make plans to reverse your situation and get control of your finances. Paying bills on time and reducing debts can greatly improve your credit score within six months. Even if loss of employment or illness resulted in credit ruin, there are ways to improve the situation. If necessary, rebuild your credit first and open at least three new credit lines. Contact a financial advisor and create a plan. Sometimes, bad credit is the result of poor money management and uncontrolled spending habits.

2. Monitor Credit Report: Individuals with bad credit rarely check their credit report for inaccuracies. This is a huge mistake because your creditors may report wrong information, or an unknown account may appear on your credit file, which can further damage credit. Fixing seemingly minor credit report mistakes can improve your score by a few points, wherein you might qualify for a slightly lower interest rate.

3. Don't Create New Debts: If you plan to buy a home within the next six months, don't create new debts such as financing a new vehicle or amassing a large amount of credit card debt. Before a loan is approved, lenders will assess your credit for the previous six months. New loans increase your debt-to-income ratio, and increase your mortgage rate. To get the lowest rate available, keep debts low. Additionally, too many credit inquiries within a short timeframe are suspicious, and lowers your credit score.