What credit score do you need for a home equity loan, HELOC?

If you’re a homeowner who needs funds to finance a home improvement project, pay off debt, or cover unexpected expenses, you may be considering Home equity loan or Home Equity Line of Credit (HELOC). These financial products allow you to borrow against equity You have a home, usually with an interest rate significantly lower than what you would get with a credit card or personal loan.

However, eligibility for one of these products is up to you Credit score. Knowing what lenders are looking for can help you make the most of your home equity borrowing options.

Compare your home equity options online now to see what you’re eligible for

What credit score do you need for a home equity loan, HELOC?

You must meet certain requirements to get one Home equity loan or HELOCOne of which is Credit score at or above a certain level. Your score helps lenders determine how likely you are to repay them. The lower your score, the less likely they are to lend to you. The higher your score, the more likely they are to lend you.

Generally, lenders require a credit score of at least 620 Qualify for a home equity loan or HELOC. However, some lenders may require a higher score, such as 680 or 700, especially if you want to borrow a large amount of money. That said, even if you qualify with a low score, your interest rate will be higher than if you had a score of 700 or higher.

Remember that your credit score is only one factor that lenders consider when approving you for a home equity loan or HELOC. So, even if you have a good score, you may still be denied if you have a high debt-to-income ratio or insufficient home equity.

See how much you can borrow — see today’s home equity rates here.

How to Increase Your Credit Score

If your credit score is lower than needed to qualify for your home equity loan or HELOC, there are steps you can take. Increase your score. They are connected:

• Pay off your loan: One piece of information that determines your credit score is your credit utilization ratio, or how much credit you’re using compared to your credit limit. By paying down your balance, you increase this ratio and appear more attractive to lenders.
• Make your payments on time: Payment history also affects your score. Always make your credit payments on time. Setting up automatic payments or calendar reminders can be helpful.
• Calculate your rent and utility payments: On-time rent and utility payments usually don’t count toward your credit score. But if you sign up for Experian Boost, they will. This can help if you have limited credit history.
• Check your credit report for errors: Mistakes on your credit report can hurt your score, so it’s important to do so Review your credit report If you regularly notice something that doesn’t seem right, contact your creditor to resolve it.
• Do not open multiple new accounts at once: Do not apply for credit too frequently in a short period of time. Applying for credit frequently can lower your score because it signals to lenders that you may be having trouble managing your finances.

Start your home equity loan search by checking current rates here.

Bottom line

If you’re interested in taking out a home equity loan or HELOC, it’s important to know your credit score and understand how lenders will evaluate it. While you may be able to qualify with a credit score as low as 620, it’s generally best to have a score of 680 or higher to improve your chances of approval and get the best interest rate. If your score is low, work to improve it so you have a strong application.

Also, remember to consider other factors that lenders will look at, such as your debt-to-income ratio and the amount of home equity. With a good credit score and a solid financial history, you can Use your home equity to his full advantage.