Struggling with bad credit can make your financial goals feel out of reach, including securing a home equity loan. But the good news is that having less-than-perfect credit doesn’t automatically disqualify you from tapping into your home’s equity. Lenders have different criteria, and some are willing to work with homeowners like you who might have a few credit dings. However, it’s important to know the steps to getting a home equity loan with bad credit. In this guide, we’ll explain how to navigate the process and what you can do to boost your chances of approval. Yes, you can get a home equity loan with bad credit, but it’s more challenging. Lenders typically prefer borrowers with good to excellent credit because it indicates a lower risk. However, some lenders are open to working with those who have lower credit scores, especially if you have substantial equity in your home and a solid income. Having bad credit might mean you’ll face higher interest rates or stricter terms. Lenders need to compensate for the increased risk they’re taking on, so they may set more stringent requirements. Still, having bad credit doesn’t make it impossible — just be prepared for a potentially longer process and be willing to take some extra steps (we’ll list below) to show lenders you’re a good borrowing investment. Even with bad credit, meeting certain requirements can improve your chances of getting approved for a home equity loan. Here’s what most lenders look for: Your credit score plays a big role in the home equity loan process. According to consumer credit reporting agency Equifax, credit scores range between 300 and 850. Scores within that range are broken into five categories, from excellent to poor. They include: Here’s a quick guide to understanding how your score impacts your options:Can you get a home equity loan with bad credit?
Home equity loan requirements
Credit score guide
