How To Get a HELOC With Poor Credit
Can you get a heloc with a low credit score?
You can qualify for a HELOC even if your credit score isn’t as good as you’d like, though you will need to meet a lender’s minimum requirement. Lenders typically will consider a credit score of 580 or lower as poor credit.
A home equity line of credit (HELOC) gives you access to cash based on the equity you’ve built up in your home. You can use the funds for a number of purposes, including home improvements and debt consolidation. To qualify for a HELOC, you will need to meet your lender’s minimum requirements.
To find out if you can meet the requirements of a HELOC with your current credit score, start your journey here.
HELOC requirements
Requirements for a HELOC can vary depending on the lender you choose. If you are looking for more favorable loan terms, talk to a lender and ask what their requirements are for lower interest rates or better terms.
Credit score requirements
Lenders tend to look for borrowers with a minimum credit score of 620 when applying for a HELOC. The higher your credit score, the more likely you are to be approved for a HELOC. A higher credit score could even get you a lower interest rate, which could potentially lead to more savings.
Other requirements
Some of the other requirements you will need to meet for a HELOC are:
- Home equity of 15%-20%
- Debt-to-income (DTI) ratio of 50% maximum
- Proof of regular steady income
What to do if your HELOC application was denied
If you don’t meet the qualifications for a HELOC and you aren’t in a rush, you should take the time to work on your credit score, build up home equity or work to lower your debt-to-income ratio.
The easiest way to improve your credit score and DTI is by paying off any remaining balances or debts you may have and making sure you aren’t late on any future payments. If you can make home improvements or necessary renovations, you could see your home equity building up for the next time you apply for a HELOC.
If your application was denied and you aren’t trying to wait till you qualify for a HELOC, there are some alternatives you might consider.
HELOC alternatives
If you don’t meet the credit requirements for a HELOC or are looking for other options, these are a few popular alternatives.
Cash-out refinance
If you have built up some equity in your home, a cash-out refinance* allows you to replace your original mortgage with a larger loan that returns the difference to you in cash. You can use these funds for home renovations, tuition costs or to consolidate debts. A cash-out refinance is a popular option because borrowers only need to make payments on one loan that could potentially have lower interest rates than a HELOC. A cash-out refinance does use your home as collateral for the loan.
Personal loan
With a personal loan**, you will get an up-front lump-sum amount with a fixed interest rate that you will have to start paying monthly. Personal loans do not always require collateral, which is what makes it such an attractive option for borrowers. However, a loan not backed by collateral does mean that most lenders require higher interest rates on your personal loan, especially if you have a low credit score.
Home equity loan
Home equity loans tap into the value you have built up in your home and use your home as collateral, similarly to a HELOC. The difference is that instead of being able to make multiple draws on a line of credit, you will get a single upfront lump-sum. Your interest will be fixed with this loan, so you can plan accordingly and won’t have to worry about potentially paying more for some months.
Credit card
Credit cards let you make purchases up to your credit limit. Paying off your credit card each month can also build up your credit score. If you have to borrow larger amounts, credit cards might not be your best option. If you are unable to pay off your credit card at the end of the month, you can end up in credit card debt with a higher interest rate, which can be hard to get out from under.
Borrowing from friends or family
You might get the best loan terms if you have friends or family who are able and willing to give you a loan. There is a good chance that they will not check your credit score, so you don’t have to worry about having a low score to qualify. Many people avoid these as, even if a contract is written properly, they are known to put strain on relationships.
How to apply for a HELOC with poor credit
After meeting the qualifications that your lender requires for a HELOC, including credit score, you will want to gather your relevant information and submit your application. Make sure you regularly keep in touch with your lender as they may ask for more information. This can help the application process go smoother and quicker.
Access your home’s equity by starting your HELOC application today!
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Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.
Owning does not provide credit counseling or credit repair services.
*Using funds from a Cash-out Refinance to consolidate debt may result in the debt taking longer to pay off as it will be combined with borrower’s mortgage principle amount and will be paid off over the full loan term. Contact Owning for more information
**Loans are made by Rate, Inc. (NMLS ID 2611).
Standard fixed rates from 9.99% to 21.99% APR. With a 0.25% autopay discount established at loan origination with an automated monthly debit from a qualifying deposit account for repayment, fixed rates range from 9.74% to 21.74% APR. Loan amounts range from $4,000 – $50,000 and are subject to state requirements. Loan proceeds cannot be used for post-secondary education expenses or to purchase cryptocurrency or securities.
Terms and Conditions: You must be 18 years of age or older (19 years of age or older in Alabama). To qualify, a borrower must be a US citizen, a permanent resident, or a non-permanent resident in the US on a valid, long-term visa. All loan applications are subject to credit review and approval as well as income and employment verification. You must meet our minimum requirements established for this offer including, but not limited to, credit history, debt-to-income ratio, and application information. Your actual rate depends on your requested loan amount, loan term, creditworthiness, and a variety of other factors. Loan amounts range from $4,000 – $50,000. Rates and loan amount may differ due to state-specific requirements and may impact your ability to qualify for a loan. Limitations: AR, CO, FL, KS, LA, MA, ME, MN, NC, PA, RI, TX, VT, WI and WY (rate); AK, CA, IL, MA, NH, NM, RI and SC (amount); OH (duration). The lowest rate advertised is reserved for the most creditworthy borrowers. Advertised rates and terms are current as of 02/21/25 and are subject to change without notice.
An origination fee of 0%-6% is charged for each loan, which will be deducted from any loan proceeds you receive, and are subject to state requirements. Restrictions apply, please refer to rate.com/personal-loans for more information.
Personal loans are only available in AK, AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, IA, ID, IL, IN, KS, KY, LA, MA, MD, ME, MI, MN, MO, MT, NC, ND, NH, NJ, NM, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, WA, WI and WY as of 02/21/25. Loan applications outside of these states will not be accepted at this time.
