My Credit Isn’t Perfect – Can I Get a HELOC?

Having good credit is the cornerstone of a healthy financial outlook. But the circumstances of life can sometimes get in the way. Your house needs a new roof. Your car breaks down. You have an unexpected illness. And so on. These situations can have a negative impact on your credit score.

However, at times, you’ll want to take advantage of a financial product. A HELOC, for example. But with a low credit score…. You may be asking, “Can I Get a HELOC with a less-than-perfect credit score?” To understand more, let’s look at how your credit score works.

Credit Score Low Down

Your credit score is made up of five components.

  1. Your payment history makes up 35 percent of your total credit. It’s the most important factor in calculating the score. Basically, your past behavior on paying your bills is used to predict your future long-term behavior. If you’ve paid your bills on time in the past, you’re more likely to keep paying on time.
  2. The next is credit utilization, or the percentage of your available credit that has been borrowed. Lenders like to see that you are keeping a low balance – or no balance – on your credit cards and can handle debt responsibly. Making your payments on time and keeping your credit card balances low are the two biggest factors in your overall score. The remaining three factors are:
  3. the length of your credit history
  4. new credit you’ve recently applied for, and
  5. your credit mix, which is the variety of types of credit you have. Your credit mix demonstrates your ability to pay back a range of debts responsibly

Improving Your Financial Standing

If you’ve had issues with credit in the past but are making positive changes to improve it – that’s great news! It might be one of the reasons you’re investigating a home equity line of credit (HELOC) as a way to gain financial freedom. While every bank has (very) slightly different requirements, a good rule of thumb is that your credit score needs to be at or above 660 before you can seriously think about getting a HELOC.

Bear in mind that 660 is the minimum, and the higher credit score you have the better. Here’s an example of how your credit score impacts the money you can access with a HELOC (note – this is an example, NOT gospel):

  • With a 660 score, you may be eligible for a line of credit worth 70% of your home’s value
  • With a 720 score, you may be eligible for a line of credit worth 95% of your home’s value

You see the difference a high credit score can make.

All banks use a different scale, so don’t assume anything! In addition, make sure you get details in writing from your lender. Even if a HELOC isn’t the right financial move for you, working to improve your credit score is always a good idea. To that end, you can make the biggest improvements to your credit score by making timely and consistent payments. Pay your bills on time, every time.


“So, Can I Get a HELOC?”

There’s only one way to know for sure: talk to someone who knows. We’d be happy to connect you with our preferred lender. Simply fill out the HELOC Adventure Experience form to find out if you might qualify.

If you’d like to learn more about a HELOC and how it may help improve your finances and free up equity that you can use for educational expenses, retirement savings or to give you greater peace of mind, download the free eBook and give it a read. Or, keep looking through the resources section on this site.