It’s no secret that getting a home equity loan can save your sanity when you need financial help for home improvements, managing your finances, or perhaps for emergency funds when getting these funds through traditional means is not possible.
Other types of loans usually come with a high interest rate or are relatively difficult to get, while a home equity loan is an easier option that comes with secure terms and friendlier interest. This is why a lot of people who need to get their finances in order opt to go for one, but what if you have bad credit?
Is it possible to get a home equity loan with bad credit?
The above is a common question, more so for people who have a lower credit score because of reasons such as having quite a lot of debt or being unable to pay some bills in the past. Bad credit will hinder you from getting other loans, but fortunately, a home equity loan isn’t off limits for people with bad credit.
Home equity loan lenders are often willing to accept applications from people with lower credit score or those who has a credit score that’s in the lower end of the spectrum.
What does this mean for you?
This means that if you’re looking for a loan provider to take care of existing debts, or you have other funding needs but already have quite a substantial debt, then you still got a chance to obtain some funding even though you have a low credit score.
Note that a source of income will have to be validated and your income should be of enough value to allow you to be able to afford paying off a loan. Having these will increase your chances of getting a loan as well as getting a favourable interest rate for your approved loan.
So how can you work on your credit score?
It often takes a few weeks to a few months for your loan to get approved, which means that you got some time to show that you are responsible enough to adhere to the terms of the loan when approved. You can try to pay off other debts to get an improved mark and improve your chances of getting approved.
How do you use your home equity loan wisely?
You can start by being extra cautious. Never take out more than you need and make sure that whatever you take can be paid off on time.
Keep in mind that your home is in line when you go for a home equity loan. No matter how small the loan is or whatever other financial issues you have to take care of, taking care of the loans that’s tied to your home should be your priority.
As for ustilising your home equity loan wisely, it can be used to:
- Pay for home renovation or home improvement projects.
- Consolidate debt
- Take care of high interest loan
- Pay off other loans or debts with a high interest rate