A home equity line of credit, or HELOC, is a line of credit that Allows homeowners to use Reviews their properties as collateral to secure funds for home repairs, education, paying off debt or other needs. For homeowners with bad credit, a home equity line of credit can offer greater approval and lower interest rates than traditional loans or revolving credit lines, Because they are Able to use Reviews their homes as collateral. This is especially true for homeowners who own a large amount of equity in their home.
- Obtain a copy of your credit report to determine precisely how bad your credit score is. Reviewing your credit report will also give you an opportunity to look for inaccuracies which may be hurting your credit score. Inaccurate information can be petitioned by contacting the creditor directly or having the individual credit bureaus contact the creditors for you. Everyone is entitled to one free credit report every year from each of the three credit reporting agencies: Experian, TransUnion and Equifax.
- Gather your financial information so that you can provide lenders with proof of household income, investments and the amount of equity in your home that you currently own. In order to be approved for a HELOC, you'll need to show that you are financially stable--particularly if you have bad credit.
- Apply for home equity lines of credit with at least three different lenders. Be prepared to provide copies of your credit report, mortgage information and proof of income prior to being approved for a credit line.
- Compare the terms and interest rates for each loan to determine which lender offers you the best deal. Points of consideration include whether the HELOC is a fixed or an adjustable interest rate, the interest rate amount, extra fees, payment schedules, rate changes and refinancing.
If you are finding it difficult to secure a home equity line of credit with decent terms, determine whether the credit line is necessary at this time. You may be better served by paying off debt and improving your credit score prior to applying for a HELOC.
- Mortgage Q&A: Is it Possible to Take a Home Equity Line of Credit for Bad Credit Borrowers?
Source : http://homeguides.sfgate.com/apply-home-equity-line-credit-bad-credit-3089.html